The concept of market-based pricing is not necessarily a new one, even though the traditional cost-plus pricing served as the standard pricing methodology for decades. The use of market-based pricing has been rather limited and fragmented at best. In fact roughly 90 percent of all OE and aftermarket parts manufacturers still use cost-plus pricing for their aftermarket service parts.
"83 percent of companies surveyed by Aberdeen reported effective parts pricing to be important or extremely important to the financial health of their companies, yet less than 20 percent of companies report feeling confident that their current pricing methodology is maximizing service parts revenue and gross profit."
What inevitably happens with cost-plus pricing is certain parts are overpriced causing lost sales and customer dissatisfaction. A part might also be underpriced, which also leads to lost profit opportunities.
Implementing market-based pricing is not an easy task and requires top-down management buy-in. However, those who do utilize market-based pricing experience several significant benefits, including:
Below are some very basic recommendations for implementing market-based pricing. InteliChek welcomes further discussion about these recommendations:
While the above may seem daunting, the long-term ROI will be such that it will be worth the effort. Additionally, moving to a market-based pricing strategy will take time to work its way through your organization. Be patient, but by all means ensure that proper performance measurement controls are in place.
"At the retail level, we moved to market-based pricing five years ago. In one example, our brake business doubled, not to mention the additional services sold while vehicles were in the shop. We realized it was a ‘must’ to know what the competitive pricing was. InteliChek helped us understand the competition in our market."
"All in all my people failed miserably in providing what should be information that is readily available to them. This information will really help with the coaching of our…"
"Corporate market research departments, manufacturers, retail chains, and companies of all kinds trust InteliChek to help them understand where they and their…"
"InteliChek allows you to share your pricing data with your customers effectively; whether it is distributed via email, website, direct mail, posters, or at the point of…"