Pricing Process
Pricing Process, Element Two, is the linkage of successful tactical and strategic price management. We build a simple, reliable pricing process focused on pocket price that facilitates daily pricing decisions, resulting in dramatic profitability improvements.
Price for Profit’s pricing process methodology, which consists of four main components, revolves around understanding pocket price and improving price setting at the transaction level:
- Pocket Price Waterfall Analysis
- Pocket Price Band Assessment
- Metrics Alignment
- Price Setting Tools & Guidance
Assessing pocket price 1 and not only invoice price, is a critical step towards developing a sound pricing process. Pocket price combines all on- and off-invoice discounts, such as payment terms, rebates, etc. The Pocket Price Waterfall is one of the tools we use to paint the “true” discounting picture. Knowing the total discount allows more effective decision-making and provides you with a better understanding of profitability.
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Pocket Price Waterfall
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Once pocket price is known, you can then identify and analyze trends utilizing Pocket Price Bands. This powerful approach gives you additional insights into profit opportunities by comparing pocket price across multiple customers, products, or markets.
Awareness of pocket price allows you to build upon best practices of your organization and increase the consistency of price setting across all quoting agents by providing key players with critical information, tools and metrics.
Our experience in designing and implementing pricing processes enables our clients to maximize investments gained from Price Leak Elimination, and sets the stage for sustainable profit maximization through Pricing Strategy.
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