Benefits of a Price Management System

Global Price ManagementThe Benefits of a Price Management System

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COPYRIGHT © SYNCRON INTERNATIONAL AB 2013

Syncron is the global leader in aftermarket service

optimization

• Dealer Management and

Aftermarket Specialist

– Inventory management

– Price Management

– Analytics

• Customers are multinational

companies

– Active users in more than 100

countries

– R&D intensive, investing >20% of

revenue

Meet the Presenter:

• 7+ years providing pricing

consulting services to

manufacturing companies

in several industry sectors

• Ph.D. Aftermarket

Solutions, Institute of

Technology at Linköping

University

Johan ÖstlinPricing Pre Sales

Consultant at Syncron

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During this webinar, you will learn the benefits of using price

management software

• How software can help you

Optimize Price and Process

• Limitations of using spreadsheets

(Excel) in a pricing organization

• Limitations of current ERP

systems from a pricing

optimization perspective

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The Price Waterfall, shows how much revenue companies

really keep from each of their transactions

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Base price management

Regional price management Net price

management Rebatemanagement

• Geography / market

• Competition• Customer

specific• Customer discounts• Freight• Packing & handling• Extra charges• Price corridor

recommendations• Special deals

• Rebates• Bonuses• Services

• Local handling costs

• Distribution costs

Market & special price lists Discount, Cost+

and Charges

Off-invoice costs Item cost

Price variance

Cost management

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COPYRIGHT © SYNCRON 2015

A pricing solution has the key elements to support your

organization’s pricing process

Global PriceManagementPrice Analysis

• Revenue, profit and margin analysis

• Customer spend analysis

• Price revisions• Cost Management• Lifecycle assessment• What-if simulations

Price Execution• Quotations and Net Prices• Price distribution • Price on-demand services• Price feedback

management• Rebate monitoring

Infrastructure• Integrate to business

systems• Central repository for

competitor data• Capture additional

data• Price tracking

Price Optimization• Product segmentation• Optimize prices• Market leveling• Discount handling• Special pricing

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Software delivers improved base and list price management

by applying advanced pricing methods

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Regional price management



specific

Base price management

Base price lists

ERP and Spreadsheet Problems

• ERP solutions will only allow you to create a price list based on cost+

• Spreadsheet solutions are highly flexible when creating user specific models – But! Flexibility comes to a cost in the form of poor performance.

• Spreadsheet solutions are also highly sensitive for introducing formula errors.

Pricing Solutions

• Designed to work with a series of advanced methods, for example value and market based pricing

• Stores pricing specific product segmentation to support differentiated pricing rules

Business Value

• Supports the identification of incorrect prices on the item level and on the general price level in a segment

• Underpriced items are raised, which increases profit• Finds overpriced items with low market share; Lowers the price,

which increases sales and revenue

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Pricing software optimizes market-specific pricing

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Global price management

Regional price management



specific

Market & special price lists ERP and Spreadsheet Problems

• ERP lacks functionality to apply different cost sources and calculate market specific price lists

• Some ERP systems limit you to a single dataset to apply market adaptions

• ERP solutions will have a problem reporting on large deviations in prices in-between markets

• Managing multiple markets in a spreadsheet becomes complicated and time consuming especially for:

• Updating and exporting data for price revision and day-to-day pricing of new items

Pricing Solutions

• Enables local market rules based on local cost and local competitive pricing

• Reports on deviations between prices in different markets

Business Value

• Supports the local adaption of prices according to market needs. Drives local revenue and profit

• Identifies where local prices are out-of-line, this lowers cross boarder sales

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Net price corridors support sales staff during negotiations

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Regional price management Net price

management

• Customer discounts• Freight• Packing & handling• Extra charges• Price corridor

recommendations• Special deals


• ERP lacks functionality to provide negotiation support to sales

• Spreadsheets are dependent on up to date historical transaction, which requires lots of time and manual effort.

Pricing Solutions

• Supports sales staff in negotiations with a suggested corridor

• Target price• Min/Max Price

• Comply with SOX by managing approval flow for prices outside of the price corridor

Business Value

• Provide sales with fact-based decision support• Improve success rate on quotations

Discount, Cost+ and Charges

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Pocket price allows you to measure profitability after off-invoice

costs

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Net price management Rebate

management

• Rebates• Bonuses• Services

Off-invoice costs

Price variance


• ERP solutions lack functionality to calculate margins considering off-invoice costs.

• Cannot calculate and execute credit notes

• Spreadsheets are dependent on large datasets and complex set-up of commercial rules for customers

Pricing Solutions

• Allows measurement of profitability after off-invoice costs

• Will monitor and forecast rebates based on up to date data

• Helps incentivize managers to drive sales on a customer basis

Business Value • Understand what items and product groups are

underperforming from a pocket margin perspective

• Enables sales organizations to drive revenue by pushing volumes at key accounts

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Cost management allows you to review proposals and cost

base to identify profit potential

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Pocket

Price

Cogs Margin

Rebatemanagement

• Local handling costs

• Distribution costs

Item cost

Cost management


• ERP solutions are often focused on comparing prices from different suppliers, but not in-between similar items

• Spreadsheets solution will also here be limited to complexity of the datasets needed.

Pricing Solutions

• Review the target price to identify when the cost is too high so that you can apply strategies to reduce the cost

Business Value • Market-based pricing identifies where cost prevents

you from lowering the price and growing market share

• Technical attributes from value-based pricing identifies items with cost-cut potential, which leads to increased profit

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To manage the price waterfall a pricing solution has the key

elements to support you organizations pricing process

Global PriceManagementPrice Analysis

• Revenue, profit and margin analysis

• Customer spend analysis

• Price revisions• Cost Management• Lifecycle assessment• What-if simulations








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Visualize the price waterfall and simulate changes in price

factors in this waterfall


• ERPs are designed to handle transactions, not

simulations and visualizations

• Spreadsheets cannot handle complex

simulations of multiple factors in the price

waterfall

Pricing Solutions

• Ability to simulate and visualize the price

waterfall

Business Value

• Enables price optimization over several levels

in the price waterfall


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Price Distribution, Notifications and Approvals help you

interact with the user and support the daily business


• ERP is ill-suited to manage pricing approval flows and trigger event-based notifications

• Spreadsheets require frequent recalculation of incoming data and export to ERP requires extensive manual efforts

• Approval workflows are difficult to manage in spreadsheets

Pricing Solutions

• Interact with the user to support the daily business tasks with notifications

• Supports approval workflows

Business Value

• Automation of price distribution improves productivity

• Approval workflows facilitate governance and lower the number of pricing outliners



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Analytics tools handle price reporting and simulations


• ERP may have some reporting and what-if

capabilities but it is not tailored to pricing

requirements

• Spreadsheets have pivot tables but the

amount of data forces aggregated analysis,

which limits depth of analysis

Pricing Solutions

• Support pricing specific reporting and

simulations

Business Value

• Report on KPIs and drill into the cause of

poor performance so you can take

appropriate actions

Price Analysis• Revenue, profit and

margin analysis• Customer spend

analysis• Price revisions• Cost Management• Lifecycle assessment• What-if simulations

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Central database expands dataset which is required to

correctly set and store the price


• ERP has some audit trail but information on items

is often limited

• ERPs don’t keep datasets needed for market and

value based pricing

• Spreadsheets limits simultaneous work by users

Pricing Solutions

• Maintains datasets needed to set correct prices

and stores the history of previous pricing

Business Value

• Enables sophisticated price methods that driver

revenue and profit

• Central databases is often key for process

efficiency, especially in larger organizations





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Potential ROI

• We see an average revenue increase of 5-

10% for using a value and market based pricing.

Can result in high as 15% profit increase

• Higher productivity in pricing processes ~30%

improvement possible

• Increased customer satisfaction and less price

complaints

Date post:	19-Jul-2015
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Benefits of a Price Management System

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