[Smart Industry] For manufacturers feeling the squeeze, dynamic pricing can relieve pressure

By Zilliant Senior Vice Presidents of Products & Science Pete Eppele

Mar 05, 2021

Read this Smart Industry article to learn how dynamic pricing can relieve pressure for manufacturers feeling the margin squeeze.

With a new administration, many US companies are eyeing what will—or will not—change with respect to steel, aluminum and other materials import tariffs. Many are advocating for materials tariffs to stay in place, while other groups are struggling under the policy.

While the incoming administration has promised a thoughtful approach, for manufacturers feeling the margin squeeze, dynamic pricing can relieve pressure in the short term. According to Barrons, “Steel prices are on fire, rising about 67% over the past three months. Higher commodity prices mean bigger profits for producers, whose cost bases remain relatively fixed over short periods.”

Manufacturers must absorb these costs while grappling with distributor and end-customer demands to lower prices, resulting in a painful margin squeeze. Consider this: According to an epaCUBE pricing survey of thousands of distribution sellers, pricing is the No. 1 pain point. Additionally, most distribution sales teams already thought their pricing was higher than the competition, even prior to 2020. Reconciling increasing costs with demands for a reduction in pricing is a constant challenge in manufacturing.

Let’s explore how global manufacturing benchmarks reveal annual margin loss due to status-quo pricing practices, with an overview of the most common pricing pitfalls in manufacturing, and a look at how reimagining this status quo can help manufacturers address cost changes and other market triggers in a faster, more dynamic manner.

The problem: Status-quo pricing

Manufacturers rely on manual tools to set and update pricing, which results in overly-broad pricing that doesn’t satisfy the demands of complex B2B manufacturing companies. Sales teams are left to negotiate with distributors and end customers, with little more to guide them than their individual experience and intuition. As a result, manufacturers globally experience an annual margin loss of 0.51% to 7.47%.

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