Pricing Challenge: Price Leaks

This post originally appeared on INSIGHT2PROFIT.com Welcome to INSIGHT2PROFIT’s 2019 Pricing Challenge! Each month we’ll discuss a common pricing challenge faced by businesses and provide some tips to help improve your profitability. First up, let’s talk about price leaks. You’ve set your product pricing, but after considerations like discounts, freight costs, program allowances, rebates and payment terms, how much of that price actually reaches your bottom line? Today we’ll look at how just one factor – expedited orders – can dip into your profit margin and how you can quickly address that challenge.   Has this ever happened to you? Your customer calls and says they need their product in three days instead of the usual two weeks. You jump through hoops to make it happen – interrupt your production cycle, delay other customers’ orders, pay extra for freight, pay overtime – and you do it for free to keep your customer happy. You just offered your customer tremendous value; you should be getting paid for it. How might you go about making that happen? First of all, ensure your customers have a clear understanding of what your standard lead time is. If they ask about expediting, and your production team says it’s feasible, let your customer know there will be an associated surcharge. Based on our historical tracking of expedited order requests, one of two things will happen: You’ll save money. When faced with a fee, about half of your customers will decide they don’t actually need the order that quickly and can deal with the regular lead time. You neither disrupted production nor incurred additional expenses to meet a need that wasn’t real. You’ll make money. The other half of your customers will appreciate that you offer the option to expedite orders and will gladly pay the surcharge,…read more >

3 Tips for Improving New Product Rollouts

Today we have a guest post from Alan Sipe, President of Toolbox sales and consulting. Alan has over 40 years of experience including Sr. VP of Sales and Marketing for Klein Tools and President of Knipex Tools. His insights in selling through various distribution channels and professional contractors are invaluable. Alan can be reached at alansipe@gmail.com. So, why isn’t your new Super-Duper Widget selling? Your Research Department talked to your users and found a need. Product Development and Design took that information and developed the world’s best Super-Duper Widget. Marketing put together literature and an excellent introduction display and sales package. Sales developed a forecast and Production has plenty of Super-Duper Widgets in stock. Literature, samples, promotional material and quotas went out to your Manufacturer’s Representatives ... right on time. Now you only have one little problem … your fabulous new Super-Duper Widgets are not selling into distribution at anywhere near projections. You did everything right … Right? There is a mistaken opinion that as soon as you give someone the title salesperson they immediately are professional Super-Duper Widget salespeople … you couldn’t be more wrong! Whether your sales staff is your own or if you use independent reps. Here are some things to consider: The first thing to consider (no matter what they tell you)is that as a Manufacturer’s Representative they represent many lines and no one can intuitively be an expert in all things. Mary may be an excellent salesperson and has great relationships with all her customers and gets good repeat orders but doesn’t do well with new products. 10312read more >