Pricing Analysis and Reporting/Optimization Solution

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Summary

Sagence conducted an in-depth analysis of our client’s pricing practices and developed unique reporting views to guide future pricing activity.

Challenge

A manufacturing client had limited visibility into its value chain because of its distribution model. Over time, they had increasing concern over the level of discounts given to customers and the decreasing margins associated with this practice. The client was seeking ways to identify pricing opportunities and to optimize pricing guidelines and controls.

Solution

Working with IT and sales leadership, Sagence extracted historical sales data from the existing ERP system and constructed a pricing data warehouse in order to analyze and isolate specific occurrences of “submarket” pricing. The development of these views required intensive data profiling to accurately account for, and reflect, pricing model changes over time.

Sagence then developed meaningful reports for our client’s sales force team to recognize comparable pricing scenarios (using customer segmentation, order size, etc.), identify submarket pricing activity and trends, measure sales representative performance and estimate the overall pricing opportunity. The production reporting solution was automated to extract sales data on a monthly basis and re-generate reports that are fully integrated into the existing sales portal.

Results

The client was able to capture additional margin and has options for a different method for guiding and monitoring pricing activity. The client increased net income from 8.6% of revenue to 9.9% of revenue.