'Set it and Get it': The Two Sides of Better Distributor Pricing

In today’s world, distributors must create and preserve value for both themselves and their supply chain partners to survive and thrive. Of the profit levers available, the most impactful one is improved price performance. 

Many variables complicate pricing efforts, including vendor pricing, market conditions, product sensitivity, channel relationship dynamics, client type, seller skills and negotiation timing. To overcome this complexity and maximize profitability, distributors must employ a “set it” and “get it” approach that optimizes prices and empowers sellers to attain that price in the market. This approach brings together analytical and human elements – a sweet spot for SPA. 

Set it – The Analytics

Everyone’s got a pricing architecture but they are not created equal. Without a pricing architecture derived from proven analytics, refined with market knowledge and updated consistently, margins tend to slip over time as costs increase and market conditions change. Distributors that fail to recognize the profit opportunity hidden in their pricing architecture will be less successful.

SPA combines its proprietary, proven analytics with each distributor’s market knowledge to quickly and efficiently deploy an optimized pricing engine to improve pricing structures and consistency in execution. Setting and adhering to analytically informed prices will lead to improved, sustainable margins.

The "set it" element of a good pricing strategy accounts for the variables that can be measured and tracked, including vendor prices, target margin and customer- and product-driven pricing sensitivity.

Data-driven pricing analytics set the stage for the informed pricing decisions that prioritize profitability. They also enable consistency that saves reps time and keeps customer satisfaction levels high.

Get it – The Human Element

No matter how great your price looks on paper (or on a mobile screen), it won't survive in the real world unless you acknowledge the human factor, which comes into play when you bring your target price to your customer.

Sales reps' core skills related to negotiation, personality and relationships help them to interpret and adapt to customers' reactions during negotiations. These interpersonal skills are critical to helping reps defend target pricing and to more accurately identify cases when exceptions are warranted. These types of skills are becoming increasingly essential as AI technology automates away lower level tasks typically done by reps such as order entry and basic information sharing. 

It’s important to arm your sellers with the right skills to “get” the prices you’ve set and to foster a culture that remains committed to your pricing architecture.

If you neglect the data-driven element of pricing, you'll find it difficult to consistently maintain and grow margins. And if you neglect the human element, your prices will not be reliably attained. Only when you combine the two can you achieve optimal profitability.

SPA offers the pricing analytics tools and negotiation training to help you set and get your best price. You can schedule a meeting here to talk with one of our industry experts.

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