Strategic Pricing Helps Distributors Increase Gross Margins
For every product, for every customer, there is a price that
produces an optimal gross margin. Until now, determining that price had
been an extremely complex task. Technology has streamlined that process
by adding strategic pricing functionality to ERP solutions.
pricing modules analyze distributors' databases for customer and order
information and then classify a) customers by type and size, and b)
items by relative sensitivity. The module then recommends how to best
price items based on the combination of these factors.
such as Pricing Structure and Customer SKU services, further enhance the
pricing optimization functionality and help enable distributors to more
tightly control pricing schedules. In addition to enabling optimal
pricing, the strategic pricing modules also allow distributors to better
manage freight recovery within their business to further ensure that
they do not leave money on the table.
Distributors who have
implemented a strategic pricing module report increases in their gross
margins from two to four percentage points in the first year alone. For
many distributors, that would mean a quick return on their investment in
a strategic pricing module – for some in as little as three months.
Posted by Dan Kaminstein Senior Business Analyst, Epicor Software