Pricing Optimization to Leverage Untapped Growth Opportunities
I have worked in the corporate world for the last 27 years and have provided consulting services to over twenty Fortune 500 companies. There is one thing that we have to remember to address, and that is that companies exist to make a profit. It seems like a bad word to utter. But let’s consider that by making a profit, companies can invest in their people, communities, technology, research and development, and many other things that move our society forward. As a result, they play a massive role that is sometimes overlooked.
I believe people, profits, and the planet can co-exist. Let’s face it, without successful companies, there will be a lot of talks but no action. Over the last decade, companies have focused on growth, sometimes at the cost of profit. Now accessible capital is drying up; companies should start looking for profits to survive and thrive as a global recession is knocking on the door.
There is one thing that has always fascinated me:
How do companies know that they will make a profit on a particular contract or customer order when negotiating with their B2B partners?
The fact is, most companies don’t, and they only know after the month-end close or quarter-end close and then adjust for the next month or quarter. This can lead to unexpected losses sometimes. Most companies focus on cutting costs than leveraging their pricing power. Although cost plays a significant role, on-invoice pricing and off-invoice adjustments optimization is often underestimated tool. One of the reasons companies can’t get visibility into their deal level profitability during a negotiation is because they use various software tools and excel files to manage the price, on-invoice adjustments, and off-invoice adjustments. Getting all the data into one platform and making sense of it is a considerable challenge.
There is often a disconnect between sales, finance, and technology teams as they all have access to a great deal of information and aren’t necessarily reviewing the same information. An ideal solution should provide visibility into future profits at the time of quote to the customer or during contract negotiation by looking into historical data, sales forecast, competitive landscape, price elasticity, inventory position, and a host of other factors.
This should serve as a guideline, and businesses should still have the power to override. These overrides should be captured so companies can get some insights and tweak the model while working to align their pricing and sales team. Our AI-powered technology within IMA360 will help your team create strategy with the best data and real-time analysis possible. Total pricing optimization has shown tremendous profitability increases in all types of industries. Set up a demonstration today to learn about how IMA360 can help you.