Unit Price Audit

Consistent unit price auditing is critical to driving improvedmargins. Our ERP (accounting systems) systems will have a pricethat we would like our salespeople to adhere to. The reality isthat often this price is overridden or changed.

 

Managing unit price fluctuations can have various benefits

 

1. Are we selling the same product to the same customer orcustomer group at different prices? (yes I have seen thathappen)

 

2. Are we lowering prices to the right customers? I havewitnessed small low volume customers with lower prices that thegood A grade customers

 

3. Which salespeople are capable or maintaining the rightselling prices.

 

4. Which customer groups or market segments are less pricesensitive and are we growing in these segments or are wedeclining.
 
The audit steps are:

Step 1. Products by Period - Identify high volume products.Your sales analytics show all customers that have purchased thisproduct
 
Step 2. Customers by periodfor the selected high volume product- Westgh SPC price
 
Step 3 - Select the selling price for this product for allcustomers

Sort best selling price to worst selling price. Observe thewide price range, certain customers are charged a prices fargreater than others. you may be surprised that these high pricedcustomers do not fall in the "D" category and yet some of thecustomers that should be charged higher prices are not.
Step 4 -Sort worst selling price to best selling price …. Arethese the right customers that should be receiving the best prices?
The sales analysis by product price shows all the customersthat are attaining pricing preference. The check here is todetermine if these are the right customers that should be receivingthe lower price.
Step 5 - Define the market segments and how the prices varybetween the market segments.
Can we grow the coolingsegment?
This is where good sales analysis capabilities can be mosteffective. The individual product is summarised into the variousmarkets that it is sold into based on the average selling priceattained within each market segment. If our goal is to optimize theprice of a specific product the market segment analytics informs uswhere the best average unit selling price is achieved. The nextstep would be to identify the tactics that can allow the growth inthat market segment.
 
 
Unit selling price analysis is one of the many ways we cancreate good growth in the distribution business without actualprice increases. That does not mean that price increases is not anappropriate strategy. We will be talking about where are the bestopportunities to increase price.