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Comprehensive Pricing Strategy for Enhanced Gross Profit Management

This document outlines a structured approach to establishing an efficient pricing matrix aimed at improving gross profit margins. It focuses on key goals such as shifting pricing strategies to prioritize competitive listing, optimal mark-up practices on costs, and maintaining fixed pricing for select products. Additionally, it details processes for daily, weekly, monthly, and quarterly pricing tasks as well as best practices for using list price multipliers and understanding pricing parameters. A clear action plan for pricing reviews and customer evaluations is also included to drive financial success.

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Comprehensive Pricing Strategy for Enhanced Gross Profit Management

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  1. MENU 5 PRICING By: Steve Moeller & Ron Stogsdill, Sr.

  2. GOALS • Establish an efficient pricing matrix to help increase gross profit • List Price Multiplier • Change “Thinking” to List Less on most products

  3. GOALS • Mark-up from Cost (branch or direct) • Limited Use – Commodities • If Cost Goes Down, So Does Sell • Fixed Price (Menu-5.3) • Labor Intensive to Maintain (review each qtr) • Lost Margin Opportunity when costs going up • Use only when there is no alternative

  4. GOALS • Identify Daily, Weekly, Monthly, Quarterly, Yearly (DWMQY) pricing related tasks • Establish Pricing Best Practices

  5. Parameters & Terminology • Contracts vs. Programs • Stock status “P” & “C” • EDLP, {vend}-1, {vend}-2 • List Price Multiplier (LPM) • Matrix (5.15)

  6. Menu 5

  7. Auto Update Pricing Menu

  8. Price Quantity Maintenance15. Pricing Matrix

  9. Price Quantity Maintenance15. Pricing Matrix

  10. Price Quantity Maintenance15. Pricing Matrix DPOINT - Points to a bucket:CPOINT - Points to a cost: 0 = Each Price  0 = Each Price01 = First bucket                               -1 = Branch Cost02 = Second bucket etc...                -2 = Average Cost06 = Last bucket                               -3 = Direct Cost 23 = LIST PRICE If a matrix price is used, a code will display in the lower left hand corner as follows:  CP – Customer, Product    PP – Program, Product     SP - Cust.Class, Product CG – Customer, Category  PG – Program, Category  SG - Cust.Class, Category CC – Customer, Class       PC – Program, Class        SC - Cust.Class, Prod.Class CT – Customer, Type        PT – Program, Type         ST - Cust.Class, Prod.Type CV – Customer, Vendor     PV – Program, Vendor     SV - Cust.Class, Vendor Note: Program name will also display (i.e. PP*CON-1)

  11. Price Quantity Maintenance15. Pricing Matrix • DPOINT - Points to a bucket: 0 = customer each price 23 = product list price (same for all) • “S”ell option – S1, S2, SA, SB • “V”endor option (product master vendor) • ABC is active (product detail ABC)

  12. Menu-35.3 Pricing Parameter

  13. Menu-35.3 Pricing Parameter Menu 35.3.7 – PM.21.Price Matrix Enter a ‘Y’ in this field to use the pricing from Menu 5.15 in all cases for all products, even if it’s higher than the each price. 

  14. To Do List • Pricing Manager & lockdowns • Eliminate price pointers (5.22) • Eliminate discounts (5.27) • Eliminate fixed customer contracts • Establish EDLP programs • Quarterly LPM review • Quarterly customer review

  15. Daily Pricing Tasks • EOD email 01-175 contracts with cost change • EOD email 01-181 products with cost change • EOD email 01-125 new products transmission • EOD email 01-155 customer with no LPM • Event Notification 35.19.4 price overrides • Event Notification 35.19.2 price hold • Event Notification 35.19.3 sold below cost • JEN Price bulletins

  16. Weekly/Monthly Pricing Tasks • JEN upcoming price changes • 5.23 FT into folder and review, delete programs that have expired • 5.35 FT into folder, review & save • have company meeting and discuss pricing • set goals to reduce the number of overrides

  17. Quarterly/Yearly Pricing Tasks • Customer review by salesman • Review customer classes • Review programs • Review List Price Multipliers • Review all customers with programs

  18. List Price Parameters Menu 35.23 – ABC Parameters RANKING "A" (SALES.12MO) 30000.00 RANKING "B" (SALES.12MO) 12000.00 RANKING "C" (SALES.12MO) 6000.00 The ABC ranking re-calculates every EOM Do you want to apply these new parameters now (Y***/<enter>)?

  19. List Price Multipliers • Customer ABC Report (12.2.40) – enter ALL, ALL, ALL for all stores combined • Menu-11.12. Customer Activity Report – ABC, LPM, APD, etc • List Price Multiplier Upload (5.20.5)

  20. Questions & Answers

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