Strategic Pricing

Increase Gross Margins from Two to Four Percentage Points

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For every product, for every customer, there is a price that produces the optimal gross margin - the highest margin you can obtain while retaining the customer's business. What that price is depends on multiple factors, from the amount of business you do with a customer annually to the particular item being ordered. Up until now, determining that right price for every item has been a formidably complex task. With Activant Strategic Pricing, that task becomes as simple as a few keystrokes.

Capabilities
  • Analyzes your invoice data to determine the best price for each product and order
  • Profiles the predicted, relative sensitivity of products and customers to support price premiums where appropriate
  • Monitors sales activity for maximum control of exceptions
Benefits
  • Maximize profits by squeezing higher gross margins out of less price-sensitive transactions
  • Support a pricing architecture that is strategic, market-based, and disciplined
  • Build customer loyalty by offering each customer maximum value for money

Research conducted by Strategic Pricing Associates, Inc. (SPA) has shown that most distributors either charge customers too little or too much for the products they buy. Both have pitfalls: charge customers too much, and they are less likely to do more business with you; charge them too little, and you're leaving money on the table. Strategic Pricing helps you get all your transactions to that optimal price - not too high, not too low, but just right.

Developed through an exclusive agreement with SPA, Strategic Pricing uses the SPA model to simplify the task of getting the prices you charge to their optimal level. The system has been developed and sharpened over 15 years with hundreds of clients in a broad variety of industries.

The Strategic Pricing module analyzes your database for customer and order information and then classifies customers by type and size. It then exports your customer data to SPA, which sends back recommendations for pricing items by customer and product. The optional Pricing Structure service from SPA will recommend optimal discount structures across customer and item categories, and the optional Customer SKU service from SPA will recommend pricing for specific customer/item combinations for your best customers. These recommendations can be imported into your Activant solution, providing easy updating and maintenance of your pricing structures.

Of course, not every transaction can or will be priced at the standard, structured price, and Strategic Pricing recognizes this by recommending and allowing exceptions. In order to maintain pricing discipline, however, you can control who may post exceptions to the prices set by the system and obtain detailed reports on what sorts of exceptions are applied.

Strategic Pricing contains a full suite of analytical tools that let you see how well you are doing in charging optimal prices in a number of ways. The tools also let you examine another area where distributors often leave money on the table: shipping charges. Using the Strategic Pricing formulas, you can also ensure that you are neither giving away freight nor charging so much for shipping that you lose customers.

According to SPA, implementing strategic pricing can increase your gross margins anywhere from two to four percentage points in the first year alone. For many distributors, that would mean a quick return on your investment in Strategic Pricing - in as little as three months.

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