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.
Strategic 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.
Features, 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.
By Dan Kaminstein