Pricing influences your market share, your share of wallet with individual customers and the profit of each individual product you sell.
But who is in charge of pricing in your organization? Are you certain that all of your teams are mutually accountable for optimizing pricing decision and activities?
Data-driven analysis is the key to effectively setting prices, capturing market demand and maximizing gross profit. Industry-leading distribution organizations know precisely what the right price is for a certain customer buying a certain product at a point in time; there is no guesswork involved. These companies – perhaps some of them are your biggest competitors – know that data driven analysis of pricing is the fastest way to drive new profits. It requires you to develop an optimal pricing strategy, implement effective pricing processes, measure and control pricing and aligning your technology with your pricing strategy.
Unfortunately, most distributors are not purposeful stewards of their own pricing strategies. Here are some of the things we here from distributors who are not leading the pack in profitability:
- “I’ve always just had a feel for what price to charge.” Translation: data analysis sounds like it’s too hard and time consuming.
- “My sales reps will tell me when we need to change pricing.” Translation: I don’t mind being in race for the bottom.
- “We research what our competitors are charging.” Translation: I’m more comfortable with another company’s data-free guess than I am my own.
Compare those excuses to comments we hear from successful distributors about why they turned to epaCUBE to create a competitive pricing strategy:
“I knew we couldn’t implement a successful e-commerce platform if our pricing was all over the board. epaCUBE gives us confidence that our prices are right for each customer online and offline.”
“I was worried about margin erosion in my most competitive markets. epaCUBE helped me maintain my profits and gain share.”
“Before epaCUBE, we suffered from lack of a standardized pricing strategy. Our customers were often confused and so were our own employees.”
The truth is, there is no good excuse not to implement data-driven segmentation and pricing; however, there are plenty of benefits from crafting your own pricing strategy.
You’re Making Pricing Decisions Today Even if No One is In Charge
If you doubt that pricing touches everything everyday, ask yourself this: When is the last time someone in your company made a pricing decision? The answer is probably 15 seconds ago. We are all making pricing decisions everyday with every customer. The problem is, we’re making them without data. We’re making guesses about what the right price to charge is. That means we’re guessing about our profits. That’s not an area you should be guessing about.
If you’re like the 60% or more of the distributors looking to implement pricing strategies right now, you know you need to address your pricing strategies. We’ve helped many distributors who lack expertise or don’t even know where to start. We’d be happy to set up a brief call to see if we could help you drive new profits as well.