3 Pricing Adjustments Manufacturers & Distributors Should Make Now

This post originally appeared on INSIGHT2PROFIT.com Years ago, an Ohio-based specialty metal business made the decision not to charge for freight costs, even though their products were extremely heavy. The rationale? None of their competitors were charging, so they couldn’t either. In reality, this company was  No. 1 in the industry, so all those competitors were actually just following their lead. When the company realized what was going on, it had the opportunity to change the policy for its entire industry. And so it did—collecting more than $1 million in additional revenues. Smart companies know pricing strategy isn’t just about the price on the invoice. To have an immediate impact on your bottom line without formally raising prices, here are three areas to tackle first. 1. Freight Costs If you’ve been operating for decades, your freight policies have probably been in place just as long. Maybe you don’t charge for freight at all, or fees are the same across all territories—or you charge the same as you did 50 years ago even though shipping rates have risen dramatically. To start, ask yourself: When was the last time our freight terms were updated? What is our justification for our freight policy? What are our competitors doing in this space? This line of questioning can help internal stakeholders determine if there’s opportunity for improvement without much effort, as the aforementioned specialty metal business discovered. 2. Rush Orders When you place an order on Amazon.com and you want 2-day shipping, you understand you’ll have to pay premium pricing—in this case, $99 for a year of Amazon Prime. Your customers realize this, too. Yet many manufacturers and distributors don’t charge extra for rush orders. If your lead time is two weeks, but your buyer needs his order in three days, are you charging extra? In order to get that order…read more >