How Distributors Can Keep Up with Cost Changes

Cost changes are coming your way faster than ever. For distributors who are unprepared, rising costs and price volatility aren’t just a headache, they’re a real threat to your business. Many of our customers are reporting they’re adjusting prices 4-5 times over the course of a month, whereas in previous years, they adjusted once or twice annually.

Fortunately, there are steps that distributors can take to transform the challenges of volatile costs into opportunities for increased profits. In fact, many distributors have already taken advantage of these practices – preserving and expanding their margins.  

Go From Surviving to Thriving

Though it might sound far-fetched, the practices distributors are using to successfully combat rising costs don’t necessarily require seismic shifts. These practices can be adopted with relative ease, and they pay for themselves in short order.

Let’s start with the big picture:

  • What’s the best way to keep up with cost changes?
    • By eliminating the complexity that slows you down from updating prices to reflect costs and protect your margins. Every day that you delay is a day of lost profits.
  • How do you accomplish that?
    • By eliminating the complexity that slows you down from updating prices to reflect costs and protect your margins. Every day that you delay is a day of lost profits.

For that, you’ll need a pricing platform.

The Tools and Practices You Need to Keep Up with Costs

1% change in price equates to an 11% change in profit.

  1. Move your pricing from spreadsheets to a software platform, so you can manage all of your prices in a program designed specifically for that purpose.
    • Making changes in spreadsheets takes hours of work.
    • When costs change often, spreadsheet price management quickly becomes unsustainable.
    • Pricing platforms come with tools that calculate margins and segment prices for A, B, and C customers.
  2. Create a consistent set of prices for your entire sales team and strictly limit overrides.
    • Even a 1% price decrease can seriously hurt margins and profit. 1% change in price equates to an 11% change in profit.
    • With solid pricing controls, the prices you offer your customers will guarantee profits without reducing sales.
    • Using a pricing platform, your sales team can literally see how price changes impact margins.
  3. Minimize lag time between manufacturer prices and your prices.
    • By making real-time adjustments, you can alter your prices minutes after you discover costs are rising.
    • And you won’t lose profit margins to rising costs.
  4. Present your customers with your optimized prices at the point of order entry.
    • Giving your customers visibility into your pricing practices might seem counterintuitive, but it can build trust and give them the information they need to improve their score.
    • C customers can take steps to gain access to B pricing. The same goes for B to A customers.

Did you notice a common thread between all of these fast-paced pricing practices? They all require centralized pricing in a dedicated platform designed for the purpose of price optimization.

Though making the switch away from spreadsheets might seem tough, using dedicated pricing software will actually save you an incredible amount of time while drastically improving your profit margins. If you can, find a distributor-specific pricing partner to work with, as they’ll understand your needs better than “Big Software.”

If you’d like to learn more about successful pricing strategies for distributors, pick up a free copy of The 2023 Distributor’s Guide here.

Choosing the Right Partner

epaCUBE provides a suite of price optimization solutions and services built BY distributors FOR distributors. For over 20 years, we’ve used our industry experience to help distributors maintain and grow profit margins – even during times of inflation. If you’re interested in learning more about price optimization’s real impact for distributors, please feel free to reach out to epaCUBE for more information.

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