Pricing Optimization: Striking the Right Balance for Margin Advantage

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This research study is published by the NAW Institute for Distribution Excellence, a leading publisher of research exclusively for and about the wholesale distribution industry. More>>

Pradip Krishnadevarajan
Senthil Gunasekaran
F. Barry Lawrence, Ph.D.
Brijesh Rao

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If you want to leverage pricing optimization best practices that are rooted in sound analytics you must read this study!

The time has come for distributors to address their concerns about shrinking margins by upping their game on pricing decisions. If distributors keep doing more with less, they’ll soon find themselves doing everything with nothing! The issue of margin erosion will never end if distributors do not get creative—first with their pricing methods and second with their value proposition. Issues involving pricing methods are more critical to profitability and so should be tackled right away.

For many distributors, pricing decisions are completely left to individual salespeople to do in their own way. Allowing this kind of flexibility is a distributor’s weakness. Pricing is already quite complex, and inconsistency will only increase complexity and lead to chaos. This is the crux of the problem. The solution lies in “complexity management”—providing structure with fewer variables, and “consistency”—doing things the same way every time. This comprehensive study will help you achieve the right pricing solution for your business!

Pricing Optimization is jam-packed with:

• 9 best practices from actual wholesaler-distributors
• 40 action steps that your firm can implement immediately
• 73 examples from wholesaler-distributors across many lines of trade!

After you read this study, you’ll be able to

• adopt a practical—yet scientific and simple—framework
• bring a new science to the abstract art of pricing
• choose the key variables that should drive your pricing decisions
• deploy existing and readily available information from your IT systems
• expand your customer stratification results for optimal pricing
• fulfill margin goals systematically
• give meaningful and concise information to your sales force so you can optimize margins
• hit gross margin improvements of 150 basis points or higher within months
• implement pricing best practices with minimal resources for a higher ROI!

This book is a collaboration of the NAW Institute and Texas A&M, two leaders in wholesale distribution education and training.

What Readers Have to Say

“This study has been an invaluable tool for highlighting opportunities to improve margins. Implementing the principles in a pilot location raised gross margins by more than 3% in less than a year. It has been an eye-opening experience for those salespeople using the cost-plus method for determining sales price.

Kevin Martin, Vice President of Operations, Pipeline Packaging

“This study brings a unique blend of methodical analytics and real-world experience to pricing optimization. The process is engaging and very well organized. This work is a true partnership between industry and research.”

Kevin Kampe, President, Womack Machine Supply

“Given the complexity of pricing, it is impossible for a salesperson to mentally juggle all the relevant elements of a pricing decision—such as customer segment information, product visibility for the branch and for the customer, historical pricing, target prices, etc. This Pricing Optimization study has gone a long way to specifying these elements and, more importantly, putting them into terms that can be quantified and managed. If you want to be profitable in a competitive market, you must understand where and when you can optimize your pricing. You can’t pull your numbers from thin air. This book can help you understand the variables and the math of distribution pricing. Don’t get on the phone without reading this study!”

—Lawrence Mohr, Senior Vice President (retired), F.W. Webb Company

Introduction to Pricing Optimization: Striking the Right Balance for Margin Advantage

AUTHOR

Pradip Krishnadevarajan

Pradip is the Co-founder of the Global Supply Chain Lab at Texas A&M University. With more than 14 years of experience as an industry advisor, educator, and speaker for wholesale distribution, Pradip helps wholesaler-distributors create strategic and tactical competitive advantage. He is an author of six books on best practices, customer analytics, business transformation, and profitability.

AUTHOR

Senthil Gunasekaran

Senthil leads research on the wholesale distribution industry at Texas A&M University. With 15 years of experience in distribution and manufacturing, he advises distribution firms, delivers executive education, and speaks at industry forums on topics influencing distributor competitiveness. He is an author of five books on distributor profitability, growth, and analytics, and holds a doctorate degree from Texas A&M.

AUTHOR

F. Barry Lawrence, Ph.D.

Barry is Director of the Industrial Distribution Program and Founder of the Global Supply Chain Laboratory at Texas A&M University. He is a Fellow of the NAW Institute for Distribution Excellence, and an author of eight books on distributor competitiveness. Barry serves as an advisor to the distribution industry on profitability and supply chain management. He is a frequent speaker for distribution associations, buying groups, and companies on a wide range of supply chain topics.

  • Speaking

    NAW Executive Summit, 2009, 2010, 2013

    NAW Large Company CEO/COO Roundtable

    NAW Large Company CFO Roundtable

    NAW Large Company Operations Roundtable

AUTHOR

Brijesh Rao

Brijesh is a leading operations research professional with 10 years of experience in helping distributors improve processes, optimize operations, and increase margins. From 2004 to 2009, he was a technical lead for several industry projects at the Global Supply Chain Laboratory at Texas A&M University. He played a key development role in the pricing optimization research consortium.