New South Construction Supply
"We use Strategic Pricing Associates (SPA), which offers an add-on to Epicor's Prophet 21," Jimmy explains. "SPA analyses the vendors and types of products you sell to try to identify your core and non-core products. The idea is that you should be able to get a higher margin for your non-core items."
That product data is put into a matrix that plots a distributor's customers by market segment, for example, resellers, the government or regular contractors; and by size – small, medium, large or huge. Combined, these three factors create a "cube" of possible pricing combinations.
"They take all that information and build a complex pricing library for you that integrates with Prophet 21. It gives you a custom price for every customer and every item – based on your own historical data."
"Why give a tiny customer the same price for a particular item that you do to somebody who buys 20 times more? SPA enables you to tighten up these variances and increase your margins. In the products we have added so far to the program, we have seen about a 2.5 percent margin increase year-over-year in our first year with SPA."
Jimmy Sobeck, Vice President of Finance and Administration