Month: July 2015

Webcast: Increasing Prices and Margins Without Sacrificing Sales Volume

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During this 60-minute webcast SPA client, Electro-Matic Ventures, will share their experiences and advice. You will gain a wealth of practical knowledge on how to increase prices and margins without sacrificing sales volume!

Program Description

Register to attend our webcast August 19, 2015 that starts at 2:00 PM EST where Richard S Laramee, President & COO at Electro-Matic Ventures, will share their journey to pricing excellence and how they are leveraging science-based strategic pricing tools to increase prices and margins without sacrificing sales volume.

To implement a solution that enhanced profitability, developed pricing discipline, and removed emotion from the pricing function, they turned to SPA to implement a proven strategic pricing initiative founded on SPA’s powerful pricing analytics tools. During this 60-minute webcast, they will share their experiences and advice that will provide you with a wealth of practical knowledge including their fast ROI and lessons learned!

SPA’s Dave Lienert will also discuss how our solutions, which leverage experience from working with hundreds of companies to drive 2-4 margin point gains on affected revenue with minimal customer pushback, can help your company.

Attendees will learn how to address the following all too common issues and opportunities for increasing profitability:

  • Customer relationships focused on product/service value, not price
  • Identifying and capturing available margin premiums
  • Identifying price-sensitive products and services
  • Improving sales reps’ confidence in prices
  • Stopping undisciplined discounting
  • Tracking metrics for sales force accountability
  • Improving pricing consistency and fairness

This webcast draws on SPA’s experience working with hundreds of companies to drive pricing gains of 2-4 margin points on affected revenue with minimal customer pushback.

Click here to Register

Other SPA Events

Click here for other SPA event dates and times.

Sign in or click here to register on our website to view our library of past webinars which covers a variety of strategic pricing topics.

Follow SPA

To easily keep up with the latest SPA announcements, events and resources you can subscribe to our Strategic Pricing Pays blog or follow us on LinkedIn or on the following major social media channels and file sharing platforms: Twitter, Google+, Facebook, SlideShare, and YouTube.

We also encourage you to join the Strategic Pricing discussions in our LinkedIn group and to sign up to receive our Strategic Pricing Newsletter by clicking here.

Pricing Professional – The time has come

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Read an article that delves deeper into the topic of how to effectively train your pricing team to implement strategic pricing principles instead of just “loading cost-centric pricing into the ERP computer system”. This article stems from a recent interview of Greg Preuer, the newest addition to the SPA team, who will be developing a program for training others in a Six Sigma Black Belt of Pricing program. Greg applied the same concepts while successfully serving as the Director of Pricing at Cooper Lighting. Excerpts of the article authored by Frank E. Hurtte Jr. who has 28 years of distribution industry experience and a lifetime in sales follow.

“customers see them [inside sales reps] as peers, and in the best of cases as a trusted professional advisor”

Distributor sellers manage their calendars better, orchestrate teams of support people and often understand bits and pieces of the customer’s business better than the customer. In many instances today’s seller has a technical degree and on-the-job experience equal to any of their customers. In most situations, customers see them as peers, and in the best of cases as a trusted professional advisor.

The inside sales group has evolved as well. Without great fanfare and sometimes without notice something happened back in the 1990s. The inside department morphed from its traditional role of training ground for outside sales recruits and elephant’s grave yard for folks who couldn’t make it, to a professional team focused on assisting customers in their selection of the right products for their applications. Today, distributors search for high caliper people who can contribute to the selling effort from the inside position. The job isn’t necessarily a stepping stone or a training slot; it’s a profession with compensation and status levels designed to attract the right kind of people.

“distributors have upped the professionalism of their warehouse and logistics teams”

Clearly all of these customer facing roles make the distributor business look different than early in most of our careers. But, changes have not been limited to the customer facing side.

In a combination back office and customer side move, distributors have upped the professionalism of their warehouse and logistics teams. Customer tolerance for shipping errors has dropped to nearly zero. The cost of fixing shipping and the resulting billing errors has escalated. In response, many progressive distributors have both installed barcode/location systems and raised the wages they pay “out back in the warehouse.” It’s not uncommon to see warehouse managers with backgrounds that include years in a manufacturer’s central distribution center. Further, the distributors establishing professional systems in the warehouse report improvements in efficiency of their operation.

“Now is the time to consider creating a new professional. The Pricing Professional.”

Many readers may be thinking, “I already have a pricing person.” However, a closer consideration of activities performed by this person has more to do with loading cost-centric pricing into the ERP computer system and very little do to with setting a companywide official price for the products going out the door.

Considering the concept of matrix pricing was a major topic of discussion during my very first distributor management training in 1991, one would wonder why the pricing profession didn’t evolve further over the past couple of decades. Reviewing hundreds of distributor organizations, experience dictates the following:

  • Many ‘customer sell prices’ are not maintained on distributor’s ERP systems encouraging sellers to use cost up pricing.
  • Cost up pricing generally settles on some ‘magical’ number which often does not reflect the value provided by the distributor.
  • Distributors lose mega bucks because their sales team neglects to consider incoming freight and other acquisition costs on specialty lines.
  • The wholesale industry struggles with eroding margins.
  • Most distributors don’t really know if the margin erosion phenomenon is a product of the economy, the market or their own actions.

“Until now, there has been no real training path for the pricing professional.”

Until now, there has been no real training path for the pricing professional. Certainly, consultants are willing to help establish a process but once the consultant leaves, things gradually slide back to mediocrity; many times initial margin gains are lost and the process must be reenergized.

Six Sigma Master Blackbelt Greg Preuer, of Strategic Pricing Associates has designed the first course designed to apply time tested Six Sigma methodology to pricing. Those who study with Greg will learn not only how drive the pricing process but how to sustain the gains and automate the process. They will become Six Sigma experts (Blackbelt) in business process with a focus placed squarely on price management.

Click here to read the complete article.

Follow SPA

To easily keep up with the latest SPA announcements, events and resources you can subscribe to our Strategic Pricing Pays blog or follow us on LinkedIn or on the following major social media channels and file sharing platforms: Twitter, Google+, Facebook, SlideShare, and YouTube.

We also encourage you to join the Strategic Pricing discussions in our LinkedIn group and to sign up to receive our Strategic Pricing Newsletter by clicking here.

SPA Featured in Industrial Supply Magazine Article on Price Increases

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SPA was featured in an article in the current issue of Industrial Supply Magazine. It covers how distributors can to tap into buyers behavioral psychology and overcome their own fears when implementing and communicating price increases.

Excerpts of the article authored by Frank E. Hurtte Jr. who has 28 years of distribution industry experience and a lifetime in sales follow.

“when the change involves a price increase, most of us hate the change”

Let’s start with this premise: nobody totally enjoys change. And, when the change involves a price increase, most of us hate the change. Yet, in most cases we accept the change and move forward. For instance, on a recent trip to the grocery store, I discovered eggs have nearly doubled from my expected price. In a nanosecond, my brain spun through the avian flu impacting poultry farmers across the Midwest, healthy egg alternatives and buying something else. But Sunday morning omelets were on the menu and the eggs quickly joined the other goodies in the shopping cart. I accepted the price increase and moved on to the real issue at hand, cooking breakfast.

“price perception is probably just as important to the grocery business as it is in the sale of industrial supplies”

As I pondered these few thoughts and made further contrasts, I came to this realization: price perception is probably just as important to the grocery business as it is in the sale of industrial supplies. Competition is everywhere. They face the same issues with national chains (theirs is Wal-Mart.) At least a sector of their customer base cherry-picks, buying only on price. But the vast majority shop for convenience, brands and bundled services. At the same time there are some notable differences.

“we face an epidemic of margin erosion via absorbed price hits”

Margins are different. The typical grocery chain operates with a grocery aisle margin in the 1-2 percent range. With this point in mind, any thoughts of absorbing the increase come to a screeching halt. In our industry, we face an epidemic of margin erosion via absorbed price hits. In this case, the underlying reason for the margin erosion is relatively simple. We are making “good margin” on one of the products we sell. This number varies from company to company, but, for the sake of argument, let’s says it is 25 percent. A price increase of two percent comes trickling down from a supplier. And, we reach a magic moment. We can follow one of three paths: 1) absorb the price increase and therefore lower our margin from 25 to 23 percent; 2) immediately pass the increase along to the customer and maintain our current margin; or 3) pass along a price increase, which incorporates the supplier’s increase and a small margin increase for the distributor.

“Many suppliers give the distributor a 30- or 60-day notice of the price adjustment”

Periodically, every manufacturer publishes some kind of price adjustment. In many industries, the increases come near the end of the calendar year. Others come irregularly, in relation to commodity price movements; things like copper, steel, oil, plastic or other raw materials. Many suppliers give the distributor a 30- or 60-day notice of the price adjustment. Customary distributor practice dictates distributors give their customers a similar notice. Stop doing this. For all but a handful of your most important customers, this practice does not make solid business sense. The extra gross margin generated during this short time will allow you to recoup a portion of the costs associated with loading new prices into your ERP system.

When this happens it’s not unusual for the company to publish a justification, but rarely is an actual increase percentage noted. We like to see distributors add a little extra for the “home team.” For instance, a manufacturer’s price increase comes in at two percent and the distributor provides the customer with a three percent price increase. If you want to get advanced and have the proper discipline, prices for items not purchased in the past six months might be increased by an even larger percentage. Again, referring to our two percent increase from the supplier, a two percent price increase might become a four percent increase on items not purchased for six months or more. Items never before purchased should be set at the “normal market price” which is established based on a discount from list rather than a cost up approach.

This article originally appeared in the July/August 2015 issue of Industrial Supply magazine. Copyright 2015, Direct Business Media., click here to read the complete article.

Follow SPA

To easily keep up with the latest SPA announcements, events and resources you can follow us on LinkedIn or on the following major social media channels and file sharing platforms: Twitter, Google+, Facebook, SlideShare, and YouTube.

We also encourage you to join the Strategic Pricing discussions in our LinkedIn group and to sign up to receive our Strategic Pricing Newsletter by clicking here.

CIO Review Selects SPA as one of 20 Most Promising Epicor Solutions Providers

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CIO Review has named Strategic Pricing Associates to its list based on its high-ROI Strategic Pricing Module within Epicor’s P21/Eclipse/Prelude software.

Cleveland, OH (SPA) July 8, 2015 > CIO Review has named Strategic Pricing Associates to its “20 Most Promising Epicor Solutions Providers 2015” list. SPA’s selection is based on its high-ROI Strategic Pricing Module within Epicor’s P21/Eclipse/Prelude software.

The CIO Review editorial research team analyzed hundreds of companies that provide Epicor Solutions to identify the companies that are at the forefront of tackling customer challenges based on merit to be part of the list. The annual list of companies is selected by a panel of experts and members of CIO Review’s editorial board to recognize and promote technology entrepreneurship.

“SPA is honored to be recognized by CIO Review’s panel of experts and thought leaders for our Strategic Pricing technology. The partnership between SPA and Epicor makes the analytics behind our proven approach to strategic pricing easily accessible to Epicor customers,” said David Bauders, President, Strategic Pricing Associates.

SPA’s flagship product, the SPA Pricing Cube™, combines your understanding of markets with SPA’s powerful analytics, to identify the optimal pricing architecture for your business, focusing discounts on the most price-sensitive products and customers, where it will have the biggest payoff in competitive positioning; and extracting small premiums on less-sensitive products and customers.

The software also takes the guesswork out of optimizing pricing in complex environments, allowing your sales force to focus on serving the customer and driving value. Our process provides for flexibility and discipline in pricing, to create a balance that works in your business.

Learn more about The Epicor-SPA Program and watch some short videos on the Epicor-SPA Partnership.

About SPA

SPA is the leading provider of pricing analytics to 100’s of complex companies of all types: manufacturing, distribution, equipment, services, and software/technology products. Since 1993, we’ve built a strong platform of proprietary analytics to quickly and efficiently help companies convert their own invoice data into pricing architectures that maximize their pricing performance and competitive position. Our typical client applies our pricing architecture and improves profitability by two to four percent of sales: $2 to $4 million per $100 million of affected revenue. The benefits are staggering; and they are typically accomplished in less than 90 days. SPA Clients include over 200 manufacturing companies including Parker Hannifin, Rockwell, GE, Exxon Mobil, Caterpillar as well as over 400 distributors including Harry Cooper Supply Company, Industrial Distribution Group, AH Harris, and ThermoFisher Scientific.

Visit us at www.strategicpricing.com to learn more about us and our approach to helping our clients maximize the benefits of their strategic pricing initiatives.

Follow SPA

To easily keep up with the latest SPA announcements, events and resources you can subscribe to our Strategic Pricing Pays blog or follow us on LinkedIn or on the following major social media channels and file sharing platforms: Twitter, Google+, Facebook, SlideShare, and YouTube.

We also encourage you to join the Strategic Pricing discussions in our LinkedIn group and to sign up to receive our Strategic Pricing Newsletter by clicking here.