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Most Companies Don’t Have Control Over Profitability. Here’s Why…


Most companies are flying blindfolded when it comes to controlling profitability. It’s not that they can’t measure profit margins. They know how the business is performing in terms of overall profit. They just don’t have visibility to the drivers that determine profitability.

Profit is an outcome of a number of drivers that are constantly changing. Unless you have visibility to these drivers you don’t have control of profitability. In reality, profit has control over you.

Price, cost, mix and volume are four fundamental drivers that have significant impact on profits. While many companies have a handle on costs (some manufacturers being the exception) many aren’t measuring price, mix and volume. As any one of these drivers change so does profit margin. And, most often, all drivers are changing simultaneously. It’s why many managers blame mix for changes in profit even when they have no visibility to it. At best, they’re left to guess how these drivers impact profit.

Getting visibility to profit drivers isn’t hard if you have the right data and tools. Sales transaction data combined with cost data provides the necessary inputs that allow you to see changes both globally and at the most granular level. Analytical tools designed to show price, cost, mix and volume are readily available and give you the ability to quickly get to the most actionable insights.

Having visibility in reporting is great. But, being able to respond to trends in price, cost, mix and volume puts money to the bottom line. Seeing profit driver performance for customers, product groups, markets, items and even sales people becomes actionable. As one CEO said, “You’ll see things in your business you never imagined.”

In one case, a manufacturer of construction products implemented a price increase earlier this year. Being able to measure increases at the customer level and sales rep level allowed management to identify underperformers and take rapid corrective action.

A wholesale distributor is able to isolate mix and volume from price increases to see which accounts are contributing to improved profitability and which ones are a drag on margins.

And, an industrial equipment company can see which accounts are impacting mix and by exactly how much.

Having access to profit driver metrics puts you in control of profitability. We’ll be expanding on the topic of price and profit management in upcoming newsletters.

If you want to learn more about controlling profitability contact Ralph Zuponcic at 330-342-0923 or


Turn Your Sales Team Into a Profit Engine


Sales operations have historically been tasked with driving top line results. Today, the very best sales teams are boosting profitability and company value too.  Front line teams have access to the highest leveraged drivers to impact profit margins throughout their daily activities. Improving awareness of these drivers and their impact on margins alone can deliver significant profit enhancement.

Four components deliver profitability through sales: Value, Price, Data and Incentives.


Recognizing your true economic value and being able to sell that value will close more deals and improve profit margins. How? Selling the economics of your offering shows the buyer how you will help reduce costs, increase sales, reduce risk or improve competitiveness. Each of these can be quantified and communicated. It requires that sales team get comfortable with the numbers. The key lies in a repeatable value selling process instead of traditional selling tactics.


If your sales team has the authority to adjust prices through discounting or even set prices, there is a significant opportunity to improve profitability. The average company will realize an 11% increase in operating profit with a 1% improvement in price. Sales teams will deliver 1% price improvement with the right skills. Knowing how to defend prices, reduce discounting and capture price premiums will easily hit the 1% mark.


Your sales invoice data and a little cost data are a goldmine of profit enhancement just waiting to happen. Analyzing customer profitability, product and customer mix, volume, and sales rep margins are just a few of the analytics that give insight to powerful margin opportunities. Add cost to serve to customer profitability calculations for a more accurate metric of profitability.


We see a lot of firms struggling to get impact on profitability through sales team incentives. Reward sales teams on the profit drivers that they can affect. Consider compensation plans that include incentives for sales achievement and price achievement if your team has influence over price. Or, add gross margin percent to a plan with profit margins dollars to insure profitable growth.


It’s never too late to start thinking about driving profit through your sales organization. As you can see, there are multiple avenues by which profit enhancement can be realized without a wholesale change to your organization. 

How Leading Sales Teams Drive Profitability


Sales teams have historically been tasked with driving top line revenue to fuel growth and market expansion. They have within their control several strategic levers to affect sales outcomes. Among them are value propositions, product selection, pricing, selling strategies and negotiation tactics. Sales performance hinges on the effective execution of these levers. Companies invest heavily in their people to improve selling skills and effectiveness. In fact, U.S. businesses spend $20 billion annually on sales training programs to improve sales execution. The goal is to sell more.

Levers available to drive revenue also drive profitability. While managers commonly turn to costs or other functions to drive profit, sales organizations have more impact over profitability than other business functions. For example, consider three fundamental profit drivers: unit volume, price and cost. Sales teams certainly are charged with increasing sales volume which remains their primary responsibility. And, when sales reps have even the slightest authority to adjust pricing through discounting, they have a strong influence over two of the three fundamental profit drivers. Even the smallest changes in price have dramatic impact on profit. Additionally, changes to customer and product mix lie within the control of the sales team as well. Mix can have measurable effect on margins over time. 

Sales organizations are in a strong position to significantly boost profitability. Let’s define profitability as not only increasing gross profit by selling more but, in addition, the ability to lift gross margin. For example, gross profit can be increased from $500,000 to $600,000 by increasing sales while gross margin may remain unchanged at 37%. But, even more desirable is to increase gross profit and improve gross margin to say, 38.5% by improvements in customer mix or lifts in price. Simply selling more may increase profit dollars but not necessarily improve margin percentage. Sales teams are in position to improve both gross profit and gross margin.

Several profit levers are available to front line teams. For example, the ability to recognize and sell economic value counters buyers efforts to commoditize offerings and thereby provides opportunities to close more deals and capture higher prices. Measuring and comparing product and customer mix across sales reps reveals targets for improvement that drives margin. The ability to defend prices through better negotiations and avoid unnecessary price discounts has a direct impact on profitability. Measuring customer profitability identifies low margin accounts requiring remediation and high margin accounts that provide a target profile for enhanced margins. The awareness of price leverage on profitability, where even the smallest improvement in price impacts margins, opens the door for reps to identify sales with low price sensitivity where selectively higher price points can be captured. (A price increase of just 1% lifts earnings for the average U.S. company by over 11%.)

Companies that leverage the profit power in the sales function typically gain 1 to 3 margin points. That’s $500,000 to $1.5 million on $50 million in revenue. Outcomes will vary depending on current margin performance and industry margin levels.

For manufacturers, wholesale distributors and business service companies that have exhausted cost reductions the sales organization provides an additional channel to realize profit enhancement and is well worth exploring.

The Must-Have Sales Skill for 2017


We are often asked by managers about how to improve sales effectiveness to drive revenue and margin. The answer is simple. Teach your sales team how to recognize and sell your value. Value based selling pays huge dividends. Nearly every company delivers benefits that create economic gains for customers. But, few truly recognize these benefits and fewer actually communicate them.

When effectively applied, value economic selling closes more deals and captures higher prices. Both generate more profit. Sales professionals aren’t just for driving top-line sales anymore but, rather, can make meaningful impact to profitability just by the way they sell.

So, how do you get sales teams to recognize and sell your value? That’s simple, too. Engage your team in training programs that install practical value selling skills. Sound programs contain three critical features.

·         Value Recognition-Create a value inventory that identifies quantifiable value. Measurable value is what buyers want to see and not just a list of features. You have tremendous value that may not be communicated effectively.

·         Value Economics-Help buyers make better buying decisions by providing the economics to support purchases. How does your offering deliver more value than the next best alternative?

·         Value Communications-Don’t be the best kept secret in your industry. Communicating your value is absolutely key to closing more deals and capturing more margins. Too often, we rush past our value in effort to close the deal.

If you are searching for ways to give your sales teams a boost for 2017, consider value sales training. PricePoint Partners offers Selling for Profit, an on-site training and coaching program that teaches sales teams how to effectively sell on value and defend prices. We deliver several of these programs every year and have many clients return for continued training.

As you prepare for a new year consider value selling to help create a competitive advantage in your industry.

Does Your Sales Team Have Enough Value IQ?


Getting your fair share of price in the marketplace is dependent on your sales team’s ability to sell your value. The stronger case made for your value directly translates into the price you capture from your customers.  Is your sales team selling your value and capturing the best price? Or, worse yet, are you losing sales due to a weak value message?

Value is an often misused term that conjures up images of low quality and low price. Not so in B2B markets. Value refers to the underlying economics that support the purchase of an item or service. It defines the benefits of the offer that help increase sales, reduce costs, reduce risk or improve competitive advantage for the user. Presenting an economic case is a powerful approach to drive value perceptions and willingness to pay more.

Here are three critical elements that every sales team member must embrace in order to effectively communicate value and defend their prices.

·         Understand the Numbers- Take the time necessary to understand the economics in every sale. How will the buyer justify the purchase? How will they compare our offering to the next best alternative? This requires understanding how your offering helps the customer improve their economics. For example, think about increasing production throughput, reducing waste, increasing quality and increasing revenue. All of these benefits are measurable and should be presented at the time of proposal. Once you can talk dollars and cents you will move the discussion away from price and focus on value.

·         What the Customer Values- Don’t assume that you know what the customer values. Every buyer is different even in identical industries. Buyers like to talk about what they value. Using your basic selling skills, ask questions, (lots of them) that uncover their value needs and their picture of success in this purchase. Here are a few to get started.

o   How will you measure success of this initiative/purchase?

o   What business results are you trying to change? How much?

o   What would you consider to be a “home run” in this purchase?

o   How will you know when this initiative/purchase is a success?

Get the buyer to paint a picture of success.

·         Trade Value- Despite the best executed value selling process, buyers are trained to cut your price anyway. Be prepared for the discussion and be committed to avoid discounting your price. Instead, trade value. When the buyer asks for a lower price offer to reduce the benefits of your sale in order to maintain a balance in value. Buyers will quickly recognize that you are negotiating and not discounting. Discounts are not free.

Improving your sales team’s Value IQ begins with understanding the value selling process. We recommend starting with training and coaching programs that lay the foundation for executing value concepts. Additionally, include solid price negotiations training that give your team the confidence to present and defend prices in the marketplace. The net result will be higher close rates and improve profit margins through better price negotiations.

PricePoint Partners provides powerful training and coaching programs to empower sales teams to sell value and protect prices. For more information on programs that can improve your company’s Value IQ contact Ralph Zuponcic at 330-342-0923 or email Ralph at

Protect Your Pricing


We just heard from one of our clients about a price negotiation that shocked their largest customer.  I want to share the story with you.

First, some background. We delivered a price and value negotiations training program to a rubber industry client less than two years ago. They learned how to defend and protect their prices against aggressive buyers and desperate competitors. The story that follows is directly from the CEO of our client.

Hi Ralph,

 Just another story on using your method of price versus value during a customer visit.  We had our largest OEM customer approached by our low cost competitor that was showing $350K in savings on a $1.2M account.  They wanted a 5% price reduction each year for the next three years and wanted to realize any savings that we made as a result of joint continuous improvement results. 

They called this a win-win situation for both of us. 

 I countered with a modest decrease due to rubber prices going down and shared the horror stories our customers that had tried our competitor had.  They were adamant in their demands.  I explained to them that maybe they just needed to have the experience with them to realize our value (they were shocked). 

I did tell them that when they returned, it would not be to the same prices they currently had, as they would be treated as a new customer, eliminating their 24% discount and we would no longer accept their credit card payment and related charges of $19K per year.  They asked us to think about what they wanted and counter offer if we could as their parent company was pushing hard.

I went back with our original offer but added another $5K in annual savings.  I gave them a progressive additional discount scale base on them increasing sales for the next three years, and told them we would share any documented savings we made collaboratively.  The additional discounts range from 1-3% based on increased sales levels and are covered by fixed costs in S&A not going up. 

Sharing the savings was no problem as we would get half of something we didn’t have.  With this they signed a 3 year deal. 

With what was a potential disaster turned out to be a positive looking deal to both sides. 

All the best,


This is a great example on how to protect your pricing. I see three key elements that made this a success.

·         Attitude – The negotiating team for this client believed that they deserved the price levels being charged based on long term quality performance. It’s easier to defend your value when you believe in your offering

·         Skills – The team had the right approach and was comfortable executing it in a difficult situation. Being prepared for price negotiations is absolutely key. Go forward with conviction.

·         Interruption – The greatest risk to any buyer is supply interruption. The client used this very effectively to increase the buyer’s anxiety. However, you must be prepared to “walk” if the buyer calls your bluff.

So, the next time you are faced with protecting your prices play offense and play hard. And, play with the resolve to win.

Stop Managing Your Margins and Watch Your Profitability Soar


Driving profitability improvement throughout an organization can be achieved in a variety of ways. Any number or combination of profit drivers can be leveraged to improve financial performance. However, all too often we see companies focused on just the margins themselves and not what’s driving them.

Consider the sales team that is measured or rewarded based on margin. Margin performance can fluctuate over time based on any number of changes to profit drivers including volume, pricing, product or customer mix, and costs. Sales teams have influence or control over some, but not all, of these profit drivers. So why hold them accountable or reward them based on overall margin performance?

Instead, hold sales accountable only for the profit drivers they can influence. Take, for example, a wholesale distributor sales team. They certainly have influence over sales volume. It’s part of their job description to positively affect volume. They typically have influence over pricing, too. Through targeted margin-based pricing, discounting and promotions, sales teams influence prices every day. And we know that pricing has very high leverage on profitability.

Consider too, product mix and customer mix. Sales teams have at least some influence over what gets sold and to whom. This is one profit driver that is not measured in many companies but often cited as a reason for declining margin performance.

Finally, costs can have tremendous impact on margins. But the sales team typically has little or no influence over costs. So why hold them accountable for overall margin performance when costs are such an integral component of it?

The way to positively impact your margin performance is to manage more deeply into the profit drivers that impact margin. Margin is a result or outcome of these drivers and not a lever in itself. Identify which profit drivers are within the control of your sales team, or any other function, and manage those drivers to get your desired margin result.

In the case of the wholesale distributor sales team, you will manage volume, price and mix to improve margins. This means monitoring their performance on each of these relevant drivers, and reporting and rewarding accordingly. Because cost is not part of this equation, using overall margin performance as the basis for evaluating sales performance is neither appropriate nor advisable.

We recognize that this line of thinking may be a leap based on how you measure sales performance today. But think about it: Sales teams rewarded on margin will close deals based on margin dollars and tend to ignore the other profit drivers available to them. When you manage these drivers and hold your sales representatives accountable for them, they will pivot toward the profit drivers they can influence and, in turn, improve margin performance. 

Acuity Margin Management by PricePoint Partners is a cloud-based management tool the delivers data-driven actionable insights into margin improvement opportunities.

3 Hidden Profit Opportunities That Aren’t So Hard to Find


The new year under way, and you’re searching for ways to improve your company’s profitability. No doubt, you have wrung costs to the minimum and continue to drive sales throughout your business . But where does your next margin opportunity lie? Where will you realize the greatest gain for your effort?

Look no further than your own invoice data (coupled with some cost data, perhaps). This data can reveal tremendous margin lift without the need for an analyst with a Ph.D. in mathematics. Some simple visualizations of the data make it easy to see the opportunities and take action. Better yet: Use an automated margin management tool to dramatically increase your speed to profit.

There are dozens of places to find margin improvement within this data; here are three to start the year off right:

Pay Attention to Sales Margin Performance

We typically hold the sales team accountable for generating top-line sales. However, looking at individual margin performance almost always reveals significant differences from sales rep to sales rep. While we realize that customer and product mixes vary across territories, an analysis of gross margins can reveal unexpected inconsistencies. Here is a simple way of visualizing margin performance.

  • Identify your most profitable salespeople and what makes them successful.
  • Identify your least profitable salespeople and target them for improvement programs.
  • Prioritize accounts by most profitable, and guide sales teams to focus their efforts on the highest areas of opportunity.

Measure Your Price Performance EVERY Month

If you read our newsletters regularly, you know by now that nothing impacts margins more than price changes. Improvement in price performance can significantly improve margins, while degrading performance decreases margins. Measure your price performance across your entire business every month. You may be surprised at how dynamic pricing can be and its impact on financial performance. Without measuring, you have no insight into how this powerful profit driver is affecting your company. Once you begin to measure overall performance, you can dig into the changes and identify the causes. We see few companies managing price performance even though it can provide huge returns. The charts below show how price performance can be tied to margin performance.

Manage Those Margins!

Most managers believe they have a handle on their margins. Yet, many are surprised at what we find when we analyze margins at the transaction level. The chart below shows the gross margin for every line item transaction for a wholesale distribution business. While management expected to see some transactions at negative margin, they were surprised to see the number of transactions below 10% gross margin. Margins at the extreme high end, on the other hand, represent opportunities for a shift in customer or product mix.

These three areas represent the tip of the iceberg. They are merely a starting point to help you analyze and improve your margins. Additional analyses are likely to reveal many more opportunities. The key is to identify areas of potential improvement and then take action to realize those improvements. By sharing your thought process with other decision-makers in your organization, and helping your sales team understand the potential rewards of their improved performance, you will foster the development of a culture that drives toward higher profitability.


Acuity Margin Management is a cloud based management tool that provides monthly actionable insights for improving profitability.  Analyses include price realization, cost, mix and volume changes along with price elasticity for sales reps, markets, product lines, SKUs and more.



No matter what type of business you are in, at some point, you will likely be faced with having to negotiate for the value that your firm delivers. That negotiation will be on price. Whether you are looking for a price increase for your goods or services or the buyer has decided to cut your prices as part of his cost reduction program, you will be faced with defending your prices and value. The thought of price negotiations is enough for some sales reps to experience anxiety and fear. It’s no wonder. Often times our largest account push back on price and the fear of losing the business can feel very real.

However, having the right mindset can help calm the jitters and level the playing field in tough price negotiations. Here are three things that will help to get what you deserve at the negotiating table.

Put Your Game Face On

Buyers perceive price negotiations as a game. Their job is to reduce costs, not buy more product. Treat negotiations as a competition. In fact, it’s been said that pricing is a contact sport. Expect to get your uniform dirty. Buyers try to put you on the defensive with threats that will degrade your business. Don’t let them. Play offense and play hard. And, most of all, play with resolve to win. Having the right attitude can dramatically change the outcome of any negotiation. We’ve seen sales reps completely cave in on buyer’s demands for price reductions before attempting any negotiations whatsoever. In one case, the projected margin loss was $1.2 million.

Understand the Buyer’s Risk

Are seller and buyer relationships all stacked toward the buyer? Buyers would like you to think so. However, something keeps buyers up at night as well: SUPPLY INTERUPTION. Even more important than reducing costs is maintaining a continuous supply to an operation. Buyers are on the hook for supply at their firms. This is your lever of advantage. You are in control of supply.

This doesn’t mean that you pull the rug out from under the customer. But, slight hints or suggestions of supply interruption go a long way. Consider the sales manager for a large industrial distributor who was negotiating with a major account. The buyer wanted a price reduction on all existing business and suggested that he may look elsewhere for supply if he did not get the reduction. The sales manager simply asked the buyer if he should continue to plan for deliveries for the next month. The buyer quickly backpedaled. Buyers bluff. You can bluff too.

You Determine How the Buyer Treats You

Eleanor Roosevelt once said “No one can make you feel inferior without your consent”. With a slight twist, this applies to price negotiations as well. Have you taught the buyer to expect price discounts? Often, our historical practices determine our future outcomes. If we have caved on price in the past buyers will expect price concessions in the future. We become their “go to” supplier for cost savings. Don’t be on that list. Buyers know which suppliers will cave on price and which ones won’t. This dynamic can be changed fairly quickly just by resisting price concessions and negotiating with resolve once or twice. The buyer will get the message and move on to a softer supplier.

Resolve and the right attitude can go a long way in improving negotiating outcomes. Think of it as a game and play offense. Push back on buyers and understand their risks. In the end, you will likely gain respect and have a healthier relationship with your customer.

Three Greatest Pricing Challenges for Wholesale Distributors


As the wholesale distribution industry experiences widespread industry consolidation, vendor reduction programs and growth in online commerce, industry participants are finding it increasingly difficult to compete for available volume and margin. While costs have been vigorously managed by most firms and sales volume gains continue to be pursued aggressively, the hunt for margin improvement eludes many distributors.

The opportunity to lift margins exists within the framework of strategic pricing management. How price decisions are made can dramatically impact margins and revenue. While most distributors have yet to leverage pricing, the ones that have embraced it have realized margin gains of 1-3%. A data-driven approach combined with an effective implementation program will achieve such results. 

Over 83% of all middle-market wholesale distributors in the U.S. are leaking 1.0 to 3.0 margin points as a result of ineffective pricing methodologies. For a $50 million distributor, that equals $500,000 to $1.5 million in lost profits that could be reinvested in the business or returned to stakeholders. Several factors contribute to this margin loss.

First, wholesale distributors inherently operate within a highly complex pricing environment. The large number of SKUs, customers and markets creates complexities that necessitate the use of pricing-specific technology. Consider the firm with 10,000 SKU items, 1,500 customers and five different markets. The number of possible price combinations exceeds 75 million. While it is unlikely that 75 million prices would ever actually be required in commerce, this example illustrates the level of complexity that exists in wholesale distributor environments.

Second, front-line sales teams are responsible for pricing execution without the necessary tools, skills or information to deliver optimal price performance. Many distributors rely on the sales team to adjust or even set prices on an item-by-item basis without the necessary supporting data to determine a true market-based price. Individual reps each have their own approach and subjective input, which results in pricing inconsistencies within market segments and product offerings.

When we put the front-line sales team in the position to influence prices without sufficient price guidance, we are basically sending them to battle without sufficient weapons. Most often, sales reps retreat on price to close the sale, nearly always leaving money on the table. In other cases, reps may unknowingly overprice a deal and lose the sale altogether.

Finally, centralized pricing analyses and pricing processes are often absent and prevent the opportunity to compare pricing outcomes among similar transactions. Historical pricing data is a powerful asset that, when combined with pricing technologies, can be used to determine market-based prices and lift profit margins. The application of centralized pricing engines is extremely effective and can be relatively low-cost.

What if each sales rep could leverage the collective pricing experience of the entire sales team?

Herein lies the solution for managing complex pricing environments. Faced with a new pricing event, we want to compare it to similar historical pricing events. The focus is on strategies for managing complex pricing in wholesale distributor environments using invoice pricing data to identify market-based price points from historical transactions.

The objective is to put pricing power in the hands of the sales team to increase sales close rates and lift profit margins.