You know how important lean manufacturing and supply chain optimization is to your company. It was true 20 years ago and it is still true today.
Well the next wave of driving profit is here: pricing optimization.
If you are not taking steps now to properly manage your pricing—understanding where your profit is coming from, reviewing transaction-level data to decipher mix, differentiating your pricing by key value drivers, and better communicating price changes—you are already behind.
Pricing optimization boils down to achieving the ideal price at the customer/product and order level that maximizes profit without hurting volume. Only a pricing application like DRIVE can help you do that.
BI Tools vs. A Pricing and Profit Application
In our previous post, we looked at a few of the weaknesses of business intelligence tools. While they provide high-level pictures of your company’s profitability, they lack the ability to dive into transaction-level data using logic and statistics to unearth the real issues and opportunities, leaving an abundance of pricing insight buried.
A pricing and profit “application,” on the other hand, applies advanced business logic and statistics to drive actionable results—not just overarching visualizations.
Choosing the Right Pricing Application for Your Company
There are two considerations when it comes to choosing a pricing application:
The application should be paired with pricing experts who can help you segment your data properly. Creating the right data foundation is critical for maximizing revenue and profit. With DRIVE, we provide pricing advisory experts throughout your subscription with the application. It starts with an extensive data “discovery” process with key stakeholders in finance, pricing, product marketing and field sales. We uncover the critical product, customer and order attributes that create “value” with your customers and can be leveraged for pricing and profitability analysis.
Decades of real world pricing and sales experience is applied to the data set. With DRIVE, advanced logic and statistics are used to quickly identify “actionable” information to leverage your key product, pricing and sales resources. This actionable insight may include:
Key statistical indexing on price and margin quickly exposing a large number of “outliers” within like “peer” groups
New or lost business and its effect on margin during the period
Items substituted period to period and what effect it had
Product “mix” changes and their influence on revenue and profitability
Products experiencing cost increases not being covered by price changes
Price “leaks” due to non-compliance on discounts, freight, packaging and allowances
Early detection of order pattern changes to alert possible customer churn
Market basket analysis to unearth potential cross selling or wallet share opportunities
Alerts on price slippage down to the customer, product level
Concessions reserved for larger accounts being received by small or mid-sized accounts
INSIGHT2PROFIT has almost a decade of experience partnering with clients in virtually every sector in B2B manufacturing & distribution to better manage their pricing strategies. The software we created, DRIVE, came out of our experience with those clients. This is what makes our application different from any other. We have learned through experience you need both a qualitative and a quantitative approach to pricing to achieve excellence.
With DRIVE, we've blended both into one platform.
Our team helps you set the data up to ensure the application is structured in a way that's going to deliver value. We then keep a monthly cadence with your organization to make sure all actionable information the application is producing will help you achieve your business goals.
The Bottom Line
Whether you are a sales leader, pricing manager, product manager or CFO, you want to add value to your business. There's no better way to do so than helping the company drive more revenue and profit.
The right pricing and profit application will allow you to take action on a daily basis to drive more revenue and profit. Instead of digging through a BI tool or spending hours on Excel and database analysis, make changes that actually impact the bottom line.
Stop leaving money on the table. Learn more about DRIVET today.