You Must Own Your Own Segments and Pricing Strategy
Many distributors are confused regarding a fundamental question: should I optimize pricing internally, or utilize an outsourced pricing service? Both options offer enough benefits to warrant further attention from the savvy executive. But either way, you must own the responsibility for the results of your segmentation and pricing strategy.
An outsourced pricing consultant service can only go so far to help with the basic math of price optimization. There is more to pricing strategy than just crunching numbers. An outside consultant cannot know your markets, strategy or tactics like you. Pricing strategy requires proper segmentation. Occasionally, an orange can fall into your bucket of apples. Not all small customers should be treated like small customers. Just because a product is in a price sensitive sell group doesn’t mean you couldn’t break it out for special pricing. Pricing consultants can only work with the data you give them. If you give your consultant bad segments, you’ll get bad answers.
The prices you provide your customers are your single most important touch point in your relationship. Your pricing strategy involves much more than analyzing sales history. Sales history can tell you something about where you’ve been, but you cannot drive forward by only looking in your rear-view mirror. You need to establish a pricing strategy that reflects you goals, your unique customer relationships, your product mixes and your relationships with your vendors and customers.
The good news is that by using epaCUBE, you will be able to better segment your customers and products into appropriate groups based on market information and real behavior so that when you deliver your files to your outsourced pricing consultants they will have much more accurate information on which to base their analysis.
epaCUBE puts you in total control of your pricing strategy, helping you perform ongoing analysis on your product and customer groups so you can quickly see which ones are grouped incorrectly.
Illustration credit: Alexander Osterwalder