Price Matrices Are Becoming More Complex and Challenging
Price matrices have always been a convenient way for sales teams to quote prices, but managing them can quickly become an overwhelming task. The huge volume of data, complex relationships and constantly changing costs certainly don’t help. As a result, it’s easy for the focus to shift away from the quality and accuracy of the price points and shift to coping mechanisms just to manage all of the data and processes.
It’s Really Hard For Pricing Teams To Keep Up
The reality for many companies is that finite human resources and spreadsheet-based tools typically used by the pricing team just make the job even more cumbersome and challenging. Unfortunately for a company’s bottom-line, these constraints often create a hard, upper-limit placed on the profit potential of price matrices, right from the start.
Coping Mechanisms Can Hurt More Than Help
When faced with a multitude of price lists to manage and inadequate resources, pricing teams do the best they can. Some will work to control large sets of prices by building their matrix on rule-of-thumb dimensions — missing the opportunity to structure the matrix around how the market actually responds to price. At other times, attention may be given to the very small fraction of the matrix that contains high-visibility customers or products. Of course, this only guarantees that you ignore the revenue and profit potential sitting in the rest of the matrix.
You Don’t Need To Choose Between Quality and Manageability
It’s possible to have all of the convenience and leverage that a price matrix affords, while not having to sacrifice profit opportunity. Pricing science identifies matrix dimensions that line up with how the market actually responds to price. It also accurately determines how customers are assigned to their part of the larger matrix. The basic concept is really pretty simple and straightforward — build a better matrix and make more money.
MarginMax Infuses Pricing Science Directly into Your Matrix
MarginMax replaces guesswork in the areas that have the greatest influence on price matrix effectiveness. Leaving behind simple formulas and high-level rules, companies are using the unique combination of science and technology in MarginMax to efficiently manage and effectively optimize each and every price in a matrix or on a list. Their pricing teams are finally able to keep up. They’re no longer focused on driving processes and rules — they’re able to focus their time on driving P&L results.