Distributors relay on pricing contracts with customers to land new business and help drive sales with strategic customers.
Unfortunately, contract pricing can also be a cause of stagnating profits as pricing is locked in for a period of time.
Most distributors have no way to evaluate their current contracts to optimize profits, let alone to decide to renew, revise or expire the contract.
In fact, our studies into distributor pricing contracts have shown that 60% or more of all active pricing contracts are simply extended by default because of a lack of visibility into expiration dates and half of those are on their second extension.
Without a review and renewal process, a temporary price break to win a sale turns into an evergreen contract with stagnant margins. Due to inflation, vendor cost increases, administrative costs and lack of statistical analysis on the original contract, the average contract is losing 4% to 7% gross profit.
That means for every $10MM of business that you have on contract, you’re missing out on $400,000 to $700,000 of gross profit.
It doesn’t have to be this way.
epaCUBE Contract Manager keeps track of all of your contracts and uses the power of epaCUBE Profit Optimizer to improve contract margins.
That way, you’ll be in full control of your pricing contracts. You’ll know instantly if margins are moving in the right direction across all of your contracts. You’ll be able to identify existing contracts where you have an opportunity to raise prices.
epaCUBE Contract Manager offers specific data views for your contracts so you and your team can view, sort, filter and manage all of your pricing contracts. You’ll get notifications on expiring contracts to get full control over your contract renewal process. You’ll have visibility into stale contracts so you can decide if it’s time to extend, revise or simply expire each contract.
Many times, sales reps implement pricing contracts as a defensive measure to ensure pricing consistency with particular customers. When matrix prices are dialed in by using epaCUBE Profit Optimizer, the need to create and administer many different pricing contracts goes away. Using epaCUBE Profit Optimizer, you are already optimizing your pricing with statistical analysis around carefully crafted customer segments. By adding that power to your contract renewal process, you will gain valuable insights about contracts that you never thought possible.
With epaCUBE Contract Manager, now your contracts can drive margins as well as sales.