Pricing Challenges in Industrial Manufacturing
Today in Industrial Manufacturing, pricing challenges
are growing increasingly complex. The number of products
in the Industrial Manufactures portfolio continues to grow as well
as the multiple distribution channels and the possibility of channel
conflict.
Industrial Manufacturers customers have become increasingly
sophisticated and are much more likely to have access to customer-related
data and greater technology resources to process this data. This
proliferation of data has exponentially increased the amount of
price information that Industrial Manufactures must track in order
to ensure their offerings are competitive and optimally priced.
Managing costs – a lack of visibility into the true cost
to serve and the price waterfall has led to unqualified discounts
on and off of the invoice. Lack of management and oversight
of contract compliance has led to billing errors and customers’ cherry
picking. Adding to all of this complexity is unnecessary
discounting by sales reps that lack tools to properly evaluate
contracts and deals.
Experts unanimously concede that Pricing is the most
powerful lever companies have to affect profits. Marn, Roegner,
and Zawada, in their revolutionary book, The Price Advantage, assert: “Failure
to take real initiative in pricing today virtually assures that
percentage points of price will slip through your hands annually—and
that huge chunks of operating profit will drop off your bottom
line.” In Industrial Manufacturing, where
margins are thin, pricing excellence has become a competitive
imperative.
Industrial Manufacturing faces a broad range of pricing challenges:
- Poorly or improperly segmented customers and markets:
customer segments remain static when in actuality they are
dynamic; changes in seasonality and regions, purchase volume,
product mix, frequency, all come into play, and few companies
are tracking these variables effectively. As a result,
companies leave money on the table by not addressing the specific
needs of each segment.
- Price changes not realized in a timely fashion: weeks
pass, if not Months, before price changes are realized due
to the dependence of disparate systems and their inability
to update price changes and deliver them to the sales force
in real time.
- Negotiation Tools: sales people don’t
have adequate tools to negotiate confidently with customers. Cost
to serve, willingness to pay, current market climate, customer
price history and other important information are not incorporated
into price negotiations
- Manual Limitations: too much effort and time
to update prices, and don’t have time to consider impact
on existing customers and contracts. Excessive manual
data entry. Too much dependence on spreadsheets.
- Oversight of Contracts and Rebates: companies
unaware that customers are not paying contract price. Lack
of rebate information during negotiations. Unknown abuses
of rebates.
- Pricing Process: pricing decisions made based
on “gut feel” rather than consideration of relevant
data
These challenges commonly lead to opportunities to
dramatically enhance business results by addressing them with proven
processes, tools, and pricing science. PROS is a leading
provider of high-value solutions that specifically address these
challenges.
PROS Pricing Solutions for Industrial Manufacturing
To meet the many pricing challenges faced by industrial manufacturers,
PROS provides a comprehensive suite of pricing software tools,
including Analytics, Execution, and Optimization.
These solutions drive high value in many different ways:
With PROS Pricing
Analytics tools, decision makers
can:
- Identify and correct destructive pricing trends
- Locate and correct poorly performing customers and
segments
- Drill down to identify root causes of poor
pricing performance
- Evaluate and quantify pricing improvement opportunities
- Understand demand behavior across segments
- Monitor market dynamics and pricing performance
to enable faster response to problems and opportunities
With PROS Pricing
Execution tools, decision
makers can:
- Provide field decision support tools that
increases sales’ confidence in system prices, empowering
them to quote the right price
- Eliminate manual pricing errors by ensuring
that negotiated prices are communicated correctly to ERP systems
and rebates are applied correctly
- Realize more from a price increase by establishing guidelines (realistic
floors and targets) based on defined pricing strategies
- Improve time-to-market of price changes
- Prevent unnecessary profit leakage through consistent application
of pricing strategy
- Create and execute business rules that eliminate
irrational pricing an consistently enforce contract terms
With PROS Pricing
Optimization tools, decision
makers can:
- Optimize price points based on best available
inputs, including forecasts, business rules, and constraints
- Use advanced analytics to guide better pricing decisions, considering price-demand
relationships, including zones of indifference
- Use price-testing to capture price elasticities
across business segments
- Minimize pricing mistakes by evaluating what-if scenarios
- Better forecasts to improve optimization results
- Automate price optimization routines for massive
data sets
Proven Results
PROS has extensive experience helping companies solve the diverse
pricing challenges faced by industrial manufacturers. Industry
leaders have called upon PROS to solve their most challenging pricing
issues, and the return on investment has been substantial.
By eliminating profit leaks, uncovering hidden price improvement
opportunities, providing sales people with better negotiation tools,
and optimizing prices across segments, PROS customers have been
able to leverage the power of pricing.
To see a demonstration of our comprehensive pricing
solution suite, contact info@prospricing.com or
call our sales team at +1 713-335-5277.
Industrial
Manufacturing | Chemicals | Petroleum | High-tech
Manufacturing |
