In today’s digital economy, companies increasingly rely on channel partners to extend their sales teams’ reach and get broader access to customers, mainly when customers rely on geographically dispersed manufacturing strategies. In the general market, over 70% of the world’s trade goes through sales channels outside the direct sales organizations of companies supplying products. That being the case, suppliers need to spend a great deal of thought and effort to manage the global, multi-currency aspects of doing business through these channels. 

Managing Channel Pricing to Maximize your business results

Price management can make the difference between success in the market and significant losses to your bottom line. Not only do you need to deal with currency fluctuations, but also with global price discrepancies, rebates, incentive programs, and all the other creative ways marketing teams come up with to try to penetrate markets and grow sales.

As you expand in new markets and build a sales channel partnership team, you have to deal with many issues that you didn’t have to face when your business was handled with your own direct sales team. Price management and the sales process discrepancies between diverse cultures and customers becomes a major headache for sales and marketing teams. You must figure out how to deal with regional discounting issues, unique product and business process flows, and the unique strategies needed to manage a global go-to-market program.

Price management starts with having a centralized business management platform that handles all the product, sales, and new business development processes of a tricky business. Once you have this, the tools to manage to price include the following:

  • Competitive Analysis – As you quote business, your price management system should help you find the highest price you can quote with a good chance of winning. To get this insight, you need analytic tools that track what you have done in the past that works and what didn’t. One of the tools required to accomplish this is quote win / loss tracking and graphical presentation.

  • Cost Waterfall Analysis – When doing quotes, it is beneficial to know whether what you are quoting will contribute to the bottom line after all the cost elements are accounted for. When you look at the manufacturing cost vs. price comparison, you can miss some aspects like incentive programs or discounts that can turn a marginal piece of business into a losing trade.

  • Revenue Leakage Management – Happens when your system allows errors to be introduced during the business management process while a customer order is being handled. Errors occur when data entry mistakes or channel partners claim credits they might not be entitled to. Price Management solutions need to minimize these types of mistakes. The NEHANET system performs a series of validation tests to ensure the order and shipment data is accurate and complete. When a claim is made, the system checks to ensure the POS data matches the Order, Quote, and Debit data approved for the request and that none of these authorizations have expired. Making sure distributors only claim what they are entitled to can save significant lost revenue.

  • Quote Optimization – Is a critical part of negotiating new business. Often customers package up several functions into an RFQ and try to leverage one against the other to get better cost concessions. In the NEHANET system, you can see the margin contribution of every part you are quoting and the aggregated margin for the entire quote so you can trade-off price in one position for more awarded quantity or commitment in other parts to maximize the quoted margin at the package level.

  • Pricing Tracking To Programs – Is another essential part of maximizing your bottom line. When the end customer commits a design, you often have to quote a price to do their system-level price estimation. When the business moves to Asian manufacturing companies, they often shop the business around to multiple reps or distributors to find the lowest price. With the NEHANET system, the opportunity is attached to expected contract manufacturers so you can identify what customer program the RFQ is related to. Knowing what the program information is, you can restrict quoting to just the distributor that registered the original design, avoid quoting other distributors for the business, and maintain the program’s initially quoted price. It is a complex logistics problem that the system needs to help you navigate the best possible solution.

Companies today need to work hard to maximize the bottom line and meet the growth expectations that management sets. Price Management is an essential part of the tool kit sales and marketing need to make sure they are always pricing to win but not giving away more than capturing the business. The NEHANET price management tools are an essential part of the Manufacturers CRM solution provided by NEHANET.

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