How Well Do You Account for Cost Changes in Your Pricing?
Our dynamic pricing engine helped this distributor account for and optimize market cost fluctuations.
A metals processor and distributor had been experiencing volatile raw material costs and had gaps in their quoting process. We helped this company experience a 3% margin improvement and an increase in the number of quotes through a dynamic pricing engine that incorporated changing market costs to provide real-time optimal price recommendations.
In addition to volatile cost changes, the company’s sales reps had the autonomy to determine the price for each transaction and felt little trust in the existing reference prices. This led to high levels of variation and margin fluctuations that didn’t properly account for the value being delivered and the cost associated with a transaction. Additionally, the slow quoting process caused the company to value speed over accurate price quoting.
INSIGHT developed a dynamic pricing engine that accounted for market cost fluctuations and utilized commodity indices to adjust prices on a frequent basis. Using advanced analytics, INSIGHT tests, tunes, and updates the model regularly to predict the cost and provide the most optimal target margin and price recommendation. To ensure usage across the team, we integrated the pricing engine with a quoting application to implement a full-cycle pricing system and provided implementation training and measurement across regions.