Pricing Granularity Trumps Price Lists

For many wholesale distributors and manufacturing companies the accepted means of communicating prices is often through published price lists. Price lists allow the buyer a quick reference for prices and discount schedules. Many buyers have come to expect price lists from suppliers in certain industries like packaging and shipping supplies.

Our pricing consultants find that the challenge in using published price lists is that it locks your prices in place across a variety of different customers. These customers may not be similar in their respective price sensitivity. In order to appeal to the wide array of buyers it requires that we set a price which appeals to all. The result is a low price and reduced margins.

The alternative is to segment your customers based on price sensitivity and set prices for each segment. Making your pricing more granular creates opportunities for increased margins and higher sales close rates. Think of it as customizing your pricing for different situations.

The challenge lies in moving away from published price lists and towards a pricing segmentation model. In some cases, a more segmented model can be implemented through targeted price lists. But, more often it requires installation in the order entry system to manage the large number of new prices. Many companies have continued to provide product catalogs but refer customers to on-line pricing schedules.