Wholesale distributors face massive complexity, with thousands of products and customers, hundreds of sales reps, volatile costs and constantly evolving competitive dynamics, including increasing threats from non-traditional online competitors. As a result, distributors often struggle to set, manage and execute pricing strategies that simultaneously meet P&L objectives and enable sales representatives to win deals.
Pricing is by far the most effective profit lever available to any company. However, many distributors often set pricing in terms of overly broad target margin percentages, cost-plus rules or list-minus targets, and ultimately relegate final pricing decisions to the field. While well-intended, this approach results in lost margin and is largely unsustainable as margins are increasingly squeezed and digital channels become the norm. In fact, the majority of distributors are missing out on an achievable 100 to 300 basis points in incremental margin as a function of poor pricing.
Furthermore, inconsistent pricing compromises the customer experience. Wholesale distributors must provide real-time, consistent, personalized pricing to compete in today’s marketplace. To do that, issues that have built up over time, across each of the price types that exist in distribution, must be systematically addressed.
This whitepaper outlines how the ideal solution holistically addresses price setting, optimization and management challenges while seamlessly integrating with best-in-class ERP, order management, CPQ and commerce solutions, tying pricing strategy to execution and results.