Developed/Presented by:Peter ManiscalcoSr. Pricing ConsultantMay 18, 2012                          © Peter Maniscalco. All...
Agenda Introduction Distributor “Behaviors” Profit Levers & Price Waterfall Pricing Tactics & Strategies Summary     ...
Introduction Pricing Factors Working with Distributors Company Sales Team                    © Peter Maniscalco. All ri...
Pricing Factors Price “accordingly” in order to motivate Consider distributor’s end-user business Adherence to your com...
Working with the Distributors Negotiating tactics used Are they concerned about value? Does it matter if your product i...
Distributor “Behavior” Imposing time pressures for pricing Threatens to take business elsewhere Price “fishing” Threat...
Distributor “Behavior” Makes unreasonable demands Needs a cost vs. sell price – margin issue? Compensate in price for d...
Company Sales Team Pricing educated Product educated Clear understanding of corporate objectives Experienced or ‘rooki...
Profit Levers Most effective way for a company to realize its maximum profit:           GET THE PRICING RIGHT! ‘Right pr...
1%Improvementin…                     … Creates Operating Profit Improvement of        Price                               ...
Pricing Waterfall Important factor in helping more effectively manage discounts that are offered Transaction Price Manag...
Pricing Waterfall  Concept shows a company where its products’ prices         erode between invoice price and actual tran...
Pricing Tactics Leverage your company’s advantage Discounting on incremental sales volume Get something in return for p...
Pricing Tactics Miscellaneous discounts – make sure limited & controlled ‘Free’ product – in lieu of price discount. ‘A...
Summary Control your price discounting Obtain something in return for concessions Leverage your company’s advantages e....
Contact InfoPeter Maniscalco, MBAContractor / Sr. Pricing Consultant484-947-6450peterm09@yahoo.comhttp://www.linkedin.com/...
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Pricing.thru distributors.maniscalco.2012r2e

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  • Company objectives- market share?, profitability?
  • Price Fishing = leveraging one seller/supplier vs another. Street bully tactics – against new or least experienced reps. Threatens to escalate price negotiations to seller’s upper management.
  • Unreasonable demands i.e. deep discounts, allowances,etc. Low price for one type of end-user business….why not all?!
  • Product educated – know the product and how to sell its value.
  • Realize max profit by getting price right! Right price can boost profit quicker!
  • Concept developed by McKinsey & Co.
  • Leverage company advantage – incumbant supplier Use size/scope of your company; Something in return for price concessions – larger piece of business/larger discount, reward change in behavior – EDI, phone-service support, modified payment terms.,
  • Misc discounts – seasonal discount, promotional discount.
  • Pricing.thru distributors.maniscalco.2012r2e

    1. 1. Developed/Presented by:Peter ManiscalcoSr. Pricing ConsultantMay 18, 2012 © Peter Maniscalco. All rights reserved worldwide
    2. 2. Agenda Introduction Distributor “Behaviors” Profit Levers & Price Waterfall Pricing Tactics & Strategies Summary © Peter Maniscalco. All rights reserved worldwide
    3. 3. Introduction Pricing Factors Working with Distributors Company Sales Team © Peter Maniscalco. All rights reserved worldwide
    4. 4. Pricing Factors Price “accordingly” in order to motivate Consider distributor’s end-user business Adherence to your company’s objectives © Peter Maniscalco. All rights reserved worldwide
    5. 5. Working with the Distributors Negotiating tactics used Are they concerned about value? Does it matter if your product is a commodity or not? Do value-added services matter? © Peter Maniscalco. All rights reserved worldwide
    6. 6. Distributor “Behavior” Imposing time pressures for pricing Threatens to take business elsewhere Price “fishing” Threatens to escalate price negotiations © Peter Maniscalco. All rights reserved worldwide
    7. 7. Distributor “Behavior” Makes unreasonable demands Needs a cost vs. sell price – margin issue? Compensate in price for distributor’s poor end-user service Expects continued low prices on all types of end-user business Claims your pricing lacks flexibility © Peter Maniscalco. All rights reserved worldwide
    8. 8. Company Sales Team Pricing educated Product educated Clear understanding of corporate objectives Experienced or ‘rookie’ © Peter Maniscalco. All rights reserved worldwide
    9. 9. Profit Levers Most effective way for a company to realize its maximum profit: GET THE PRICING RIGHT! ‘Right price’ can boost profit quicker Leverage & payoff of improved pricing is high © Peter Maniscalco. All rights reserved worldwide
    10. 10. 1%Improvementin… … Creates Operating Profit Improvement of Price 12.3% Var. Cost 6.7% Volume 3.6%Fixed Cost 2.6%Note: Compustat, Deloitte analysis (2009); Impact estimate based on average Fortune 1000 company © Peter Maniscalco. All rights reserved worldwide
    11. 11. Pricing Waterfall Important factor in helping more effectively manage discounts that are offered Transaction Price Management - Key aspect of basic pricing management Point where product “meets” customer Invoice vs. transaction price – difference can mean significant reduction to bottom-line profit © Peter Maniscalco. All rights reserved worldwide
    12. 12. Pricing Waterfall  Concept shows a company where its products’ prices erode between invoice price and actual transaction price. In the Price Waterfall, each Component Represents a Revenue Leak$5.00 0.15 Competitive 27.4% Off Discount 0.10 Order $4.75 Invoice Size 0.30 Discount Payment Terms Disc 0.37 Annual 0.35 Volume Off 0.20 Bonus Invoice Advertising 0.08 $3.45 Promo FreightDealer List Invoice PocketPrice Price PriceNote: Concept developed by McKinsey & Co. © Peter Maniscalco. All rights reserved worldwide
    13. 13. Pricing Tactics Leverage your company’s advantage Discounting on incremental sales volume Get something in return for price concessions Value-added services – e.g. priority scheduling & delivery © Peter Maniscalco. All rights reserved worldwide
    14. 14. Pricing Tactics Miscellaneous discounts – make sure limited & controlled ‘Free’ product – in lieu of price discount. ‘Advertising’ allowance – ensure distributor’s promotion of your product is quantifiable © Peter Maniscalco. All rights reserved worldwide
    15. 15. Summary Control your price discounting Obtain something in return for concessions Leverage your company’s advantages e.g. incumbency, size, etc. Offer value-added services © Peter Maniscalco. All rights reserved worldwide
    16. 16. Contact InfoPeter Maniscalco, MBAContractor / Sr. Pricing Consultant484-947-6450peterm09@yahoo.comhttp://www.linkedin.com/in/petermaniscalcoTwitter: @PeterPeterm09

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