The Pricing Factor: Why Pricing is More Important Than Ever

We’ve entered a new era for manufacturers and distributors. Inflation and price volatility, increasing customer expectations, and labor shortages are drastically changing how companies operate.

To maintain a competitive advantage, companies need to solve the broken pricing process that’s at the center of these challenges. Pricing impacts brand, financials, buying experiences, and selling. It touches so many parts of the business that ignoring it is detrimental to profitable growth.

The Market is Changing and Pricing is at the Center 

Here’s how pricing plays an important role in today’s major market trends.

Inflation and Price Volatility

When commodity costs increase (or even decrease in a deflationary period), adjusting prices with speed and precision is critical for maintaining business performance. Inefficiencies in a company’s pricing process are often exposed when the number of price updates per year is increased. Spreadsheets and manual tools can hamstring a pricing team trying to update prices, an executive team deploying new pricing strategies, a sales team that must act on the new strategies, and customers who expect rational and consistent pricing as the market moves.  

“Progress toward inflation targets has somewhat stalled since the beginning of the year. This could be a temporary setback, but there are reasons to remain vigilant.” – Global Economy Remains Resilient Despite Uneven Growth, Challenges Ahead, IMF.org

Increasing Customer Expectations

Whether direct sales, through a distributor, on an eCommerce site, or even a third-party marketplace, customers expect a seamless, personalized, and self-service experience. But if that experience is marred by prices that are inaccurate or misaligned, customers and prospects will move elsewhere. Additionally, “call for pricing” online prompts or “let me get back to you on that” from sales reps stifle the delivery of deal-ready prices to customers at the speed needed to compete and win. 

“Manufacturers often struggle with increasing content requirements, more channels and touchpoints to manage, and rapidly changing customer needs, which require a company to be agile, says a new survey of 1,500 manufacturing companies by IDC.” - Customer expectations for digital experiences keep rising, DigitalCommerce360.com

Labor shortages

Companies can’t react to these market trends by simply adding more headcount – especially when there is a labor shortage in manufacturing and distribution. Rather, it’s critical to find a balance between leveraging pricing technology and hiring the right expertise to operationalize that technology at scale. Only then will you be able to ensure your pricing will be the lever needed to drive profitable growth. | 

“Many manufacturers still struggle to fill critical jobs, and companies should continue to find ways to broaden the talent pipeline, foster inclusive cultures, and create ongoing upskilling programs for the digital future of manufacturing.” - Creating pathways for tomorrow’s workforce today, Deloitte.com

Take Control of Your Pricing Process

“All too often, pricing is managed in a vacuum. If pricing is not viewed from within the greater context of the overall business, with awareness of each area that impacts pricing and is impacted by pricing, there is significant risk to profitability, market relevance, and ability to execute on strategy,” Zilliant Account Executive Matthew Knaggs said.

Changing market dynamics create new opportunities to rethink and transform critical areas of the business. Pricing is often an unrecognized blind spot or bottleneck. Typically, spreadsheets are the only source of truth for pricing throughout the entire organization. 

A broken and manual-based pricing process creates a number of challenges and inefficiencies that make it impossible to manage pricing with any sort of control or flexibility. As a result, companies are not able to use pricing as a strategic lever for profitability and are not able to adequately respond to today’s business trends. 

By managing the entire pricing lifecycle, manufacturers and distributors can capture more market share by unlocking the ability to close deals faster, increase deal size and profitability, and create better buying experiences across all channels including self-service. Only then will companies succeed in driving profitable growth amid volatility.

This is part of a series on the Pricing Lifecycle. Read our previous blog posts to learn what the pricing lifecycle is and discover the 10 most common signs of a broken pricing process.