Jan 27, 2020
Why you have to check out today’s podcast:
- Why it is not a good idea to use Cost-Plus pricing in the manufacturing and distribution channels
- Which tool to use to provide data for a favorable Pricing when you can’t obtain data from distribution channels
- Find out favorable arguments, from a pricing standpoint, to go direct selling rather than by way of distribution channels
Ralph Zuponcic is the president and co-founder of PricePoint Partners, LLC., a company that enables wholesale distributors and manufacturing companies to improve margin performance through price optimization initiatives, margin management tools, and highly effective pricing training programs. He is now a national authority on strategic pricing and margin management. Ralph has lectured at The Ohio State University Fisher College of Business and at associations and companies across the country. He has also been featured in publications including The Wall Street Journal, Fortune Small Business, CFO Magazine, and Marketing News.
In this episode, Ralph shares about pricing in the manufacturing and distribution channels industry.
“Focus on smaller accounts to start with. And see what kind of improvement you can get there. And look for that price variation. And you don’t need to boil the ocean just start getting some improvement. Start small with pricing. Get some early wins. And move on from there.”
– Ralph Zuponcic
Get COV’s Pricing Metrics:
The Most Important Pricing Decision in a Subscription Business Course at https://www.championsofvalue.com
Topics Covered:
01:26 – Ralph’s path to Pricing
04:07 – Reasons why he is not for Cost-Plus Pricing
07:08 – Why is there a lot of focus on cost in manufacturing companies
08:33 – What happens when you use Cost-Plus Pricing and you lower your cost by a certain percentage
09:03 – What do most distributors use other than Cost-Plus to address competitive pressures
11:32 – What benefit can you get from Price-Variance Analysis
12:59 – How to deal with Pricing with distribution channels who don’t have direct sales forces in the marketplace
16:06 – How to do Pricing for distributors that is advantageous to both manufacturers and distributors
18:18 – Ralph’s thoughts on distributors getting to choose their own prices
21:31 – The difficulty with the manufacturer not having direct access to a distribution channel’s Pricing
24:10 – From a pricing standpoint why is selling directly a better choice than through distribution channels
25:26 – On the idea of manufacturers trading lower price to distributors for their data
26:55 – Valuable pricing advice that can impact one’s business
Key Takeaways:
"If you are obviously pricing too high for the distributor and doesn't leave him enough margin, it disrupts what's going on in their marketplace with the final user or the final buyer. Achieving that balance is difficult. If you can have a relationship, maybe not with all the distributors, but some key distributors that are tight enough that you can have those discussions openly and honestly, it starts to give you some better insight and then you can cooperate right with each other to arrive at a pricing that's going to be meaningful both coming from the manufacturer and coming from the distributor." — Ralph Zuponcic
"If I'm a manufacturer and I have the choice between direct and distribution, I know what I would prefer from a pricing standpoint. I'm ready to go direct. I have more control."— Ralph Zuponcic
"What we do is we take all the data, all the price points that have been charged for a given item. We put them on a scatterplot, and we see how much variance there is. When you look at that scatter plot, we tend to think of it as market research data because it's telling us what customers are willing to pay." — Ralph Zuponcic
“Start small with pricing, get some early wins and move on from there.” — Ralph Zuponcic
Connect with Ralph Zuponcic:
- Pricepointpartners.com
- Phone number: (330) 342-0923
Connect with Mark Stiving: