How to Build a Value-Based Pricing Culture
Moving to a value-based pricing approach begins by creating a culture for it internally. Here s a 10-step roadmap to do so.
Jan 22nd, 2021
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Every distributor believes that they have a unique product and service combination and can serve customers better than their competition. If that’s true, why do distributors still rely on cost-plus pricing and market-based approaches, which can leave up to 450 basis points of margin on the table?
The pricing method a distributor selects is a primary reason for missed margin opportunities. Cost-plus and market-based pricing may be the most widely used pricing philosophies, but their rudimentary approaches typically result in massive margin leakage. Cost-plus pricing accounts for product cost and applies a standard gross margin to all products. Market-based pricing, which is quite popular among the sales force, conservatively prices close to the competition with the goal of safeguarding market