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Distributor Deploys Customer-Specific Price Optimization, Boosts Margin Rate 150 Basis Points

June 5, 2015

After decades of setting prices using manual methods, company leaders at this industrial distribution company noticed a curious trend: For the business that was conducted at the sales counter, or spot business, sales reps were requesting price overrides at an alarming rate.

Recognizing that the company’s matrix pricing was too high – resulting in the significant rate of exception requests — they began to explore price optimization as a means to ensure that sales reps would receive price guidance that was deal-specific, naturally leading to fewer price overrides.

After the optimized prices were in market one year, company leaders saw an interesting trend. Margin rate in the portion of the business where price optimization was being used had increased by 500 basis points. Given the tremendous bottom-line impact with minimal revenue disruption, this distributor decided it was time to continue its transformative price optimization journey.

This case study details how company executives deployed customer-specific price optimization to a critical slice of the customer base — strategic, large customers.

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