6 Pricing Habits of Great Distributors

What are leading distributors doing to increase their profits and market share through improved pricing? Here are the six (6) pricing habits of great distributors.

1. Great distributors set prices based on data.

Unfortunately, many distributors make guesses about pricing based on how other distributors are pricing products or random feedback from sales reps. Great distributors base their pricing strategy on deep analysis of various customer segments and back up that strategy with real data.

2. Great distributors use great segments.

Many distributors have weak segments based on industry categories, such as residential contractors or repair organizations. Unfortunately, just because two companies fit into the same industry, it doesn’t mean their behavior or pricing concerns are at all related.

Even worse, some distributors use small, medium and large as a way to categorize their customers. But just because a customer is small to you in terms of their business, they might bring you more business and actually become a large customer if you priced them correctly.

Great distributors create statistically relevant segments for accurate pricing and increased profits.

3. Great distributors have crystal clear pricing.

Do your customers get different pricing if they call different sales reps or if they log onto your e-commerce site? Nothing causes more frustration to a customer than inconsistent pricing. Great distributors provide a consistent customer experience in all channels — in person, over the phone, online and at the job site.

4. Great distributors limit their pricing overrides.

Too many distributors allow their sales reps to override pricing at any time, consistently eroding profits. Great distributors work to get their pricing strategy correct in the first place so that their sales reps stop overriding prices. Sales reps then become more confident in the reality of your price levels so they panic less in their negotiations and they trust your price matrix.

5. Great distributors use the right pricing software.

Segmentation and pricing is too complex to keep track of using manual processes and lengthy calculations. Business intelligence tools fail because setting up the analysis in an ever-changing marketplace is nearly impossible. Great distributors use software to manage something as complex as segments and pricing.

6. Great distributors manage their own pricing.

Pricing consultants take too long to provide analysis, refuse to share their black-box methodologies and don’t understand your customer segments beyond simple categories like small, medium and large. Great distributors know that they must be in control of their own pricing strategy to perform quick, easy and ongoing analysis to find new profit every day.