In the complex world of manufacturing, where every decision can impact the bottom line, strategic pricing stands out as a powerful lever for success. Amidst the dynamic landscape of supply chains, customer expectations, and market fluctuations, there’s a crucial question every manufacturer must ask: Are you leaving money on the table with your current pricing strategy?
In a recent insightful discussion between industry experts, Frank Barovsky, Principal of Digital Consulting, B2Beyond, shed light on the transformative power of strategic pricing. Barovsky introduces the concept of the scatter plot—a visual representation of pricing distribution across products and customers.
“Not all customers are created equally. Whether it’s differentiation based on availability, customer service, or pricing, you should be doing it because otherwise, you’re leaving money on the table,” Barovsky says. This scatter plot serves as a starting point, revealing the disparities in pricing and highlighting the potential for optimization. It’s the “before” snapshot, showcasing where a company stands in the pricing landscape.
The conversation evolves to emphasize the need for a shift from the scatter plot’s current state to a future state where pricing decisions are not just reactive but predictive. The experts at Zilliant stress the importance of considering additional data points, including competitor prices and market trends, to create an elasticity curve.
“Our goal is to help you predict and display the right price. We’ve been doing it for a while, and this is not just about catching up with the latest trends—it’s about staying ahead, ” says Nathan Rabold, SVP of Customer Success & Support at Zilliant. The power lies in predicting where your prices should be based on a comprehensive analysis, moving beyond the scatter plot to a more strategic and dynamic pricing model.
Frank Barovsky draws attention to the pivotal role of pricing in shaping the customer experience. While product availability remains a top priority, the price becomes the second crucial consideration. Customers want transparency and to feel rewarded for their loyalty.
“If I give you my loyalty over a period of time,” Barovsky says, “you should repay me with perks. Pricing takes different shapes, including White Glove service or Co-op dollars. It’s about understanding the lifetime customer value.” This perspective reinforces the idea that pricing is not just about numbers on a spreadsheet, but a key component in building long-term customer relationships.
In the realm of pricing transformation, start small for quick wins. While the ultimate goal may be a company-wide pricing shift, focusing on specific divisions, regions, or product lines allows for a controlled and measurable approach. “Focus on a quick win to start,” suggests Nathan Rabold. “Find an area where you’ve got the right mix of people and leadership, show some value, and use that success to fund broader projects.” This approach not only builds credibility but also provides tangible results that can be used to secure support for larger initiatives.
As we navigate the intricacies of the manufacturing landscape, strategic pricing emerges as a beacon of untapped potential. The scatter plot serves as a wake-up call, urging companies to assess their current pricing strategies critically. By embracing predictive pricing models and considering the broader customer experience, manufacturers can unlock new levels of profitability.