"Customer counts, basket size, units, sales, and margin dollars all far exceeded our expectations- in some cases 4 fold"
Mark Kelso,
Director of Pricing, Pamida
 
 

In recent years, the challenges of growing sales and profitability, staying competitive and keeping customers satisfied have increased dramatically.  These, among others, have shaped the business landscape:

Product cost volatility
Compressed product life cycles
Continued fragmentation of market segments
Expanding global competition


All these influencing factors have made it difficult for companies to set the right price for their product at the right time.  Pricing excellence is all it takes to capitalize and profit from pockets of opportunities found in the demand curve.  This can only be achieved through price optimization.

In current competitive situations, it only takes a few days for shifts in demand to take place requiring necessary price adjustments. With thousands of products made available to various market segments, the absence of scientific tools makes price management a difficult and sometimes impossible task.

Often overlooked, price is the only element in the marketing mix that is directly correlated with revenue; all other elements of the marketing mix only represent costs. Price is both strategic and tactical and is the most flexible element in the marketing plan.

 

What is Price Optimization?

Price Optimization is the setting of prices to maximize revenue or contribution margin by leveraging your customers’ willingness-to-pay and actual demand for your products or services. 

(a) Low price: High demand – Low profit margin, profit margin is negative or insignificant therefore earning potential is not fully maximized.
(b) High price: Low demand – High profit margin, demand is limited, so high margin is not converted to maximum profit. 
(c) Optimal price: Moderate demand – Moderate profit margin, earning potential is fully maximized.

With the additional complexities of thousands of SKUs, shifting consumer preferences, promotions, seasonality, varying market segments, affinity, and cannibalization, keeping prices optimal on a weekly or monthly basis is a daunting role and requires a great degree of accurate and timely number crunching. 


How OPRE Can Help?

OPRE Consulting is the first pure price analytics consulting firm in the country that offers Price Optimization solutions and services to medium and large sized companies. OPRE Consulting provides the necessary expertise and tools to equip your company with the science you need to remain competitive and achieve pricing power. OPRE has partnerships with PROS and Revionics, two leaders in the field of price analytics.  This allows OPRE to cater to the pricing needs of both the B2B and B2C markets.

 
 
 
 
Twitter
Facebook
Linked In
Blog
info@opreconsulting.com
  Freemont Arcade        
11 Shaw Boulevard,  Pasig City Philippines