Ensuring the Price is Right

Expanding margins, offering a consistent pricing strategy and avoiding negative margin creep are the tactics that will ensure profitability.

Distributors see price optimization as very important to their business.  With the current rising prices in rare earth phosphors and the scheduled announced increases to the lamp pricing at three month intervals for the foreseeable future, pricing has never been more critical.

Expanding margins, offering a consistent pricing strategy and avoiding negative margin creep are the tactics that will ensure profitability.  Some distributors are creating dedicated pricing departments staffed with individuals who understand the pricing science and have a keen eye for strategic pricing.  They review customer purchasing history to assess product mix and cost to serve factors.   A key factor is striking the right balance between relationships and analytics.  One way to achieve this goal is to surround sales teams with a supporting finance team to help optimize pricing performance.

ACTION POINT: Optimize customer pricing based on customer purchasing history(OERL) to set strategic price levels.