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Use Case Situation Description
Reducing unnecessary discounting through competitive price match evaluation offers streamlined profitability, maintaining pricing integrity while meeting customer expectations. This approach prevents profit erosion, promotes consistent pricing, and preserves brand value. It enhances profit margins, minimizes revenue loss, and ensures competitiveness without compromising business sustainability. In this use case, we will look at how you can do that in Pricefx.
Prescriptive Design Requirements
As a [Pricing Manager/Sales Rep], I want to reduce unnecessary discounting by evaluating competitive price match requests so I can quickly respond to customers and make sure:
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customers are priced on a market basis for a product
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evaluate market changes quickly for proper customer response to retain business.
The overall design requirements are summarized in these articles:
Functional and Non-functional Requirements
These are the functional requirements for this use case:
Complication:
When a customer calls our sales representative presenting a competitive price challenge, they expect us to know our business and markets and to be able to provide an immediate response. Sales must present the situation via phone or email to our pricing and product teams, and it seems to take forever to get a response, sometimes costing us valuable business when the customer gets impatient and moves on to do business with the competitor. Delays on our end occur due to many factors, including lack of comparative pricing data, availability of people, and things just getting lost in messaging and communication systems.
Capability Needed:
A way to submit a price request that will get a rapid response by providing automated analysis of the competitive situation, using relevant pricing data from similar customers, and getting the immediate attention of any needed approvers.
Benefit:
Existing business will be retained at appropriate pricing levels.
KPIs:
For these situations, (1) a measure of total volume, revenue, gross margin, or contribution margin at risk (for the specific deal, and cumulatively), and (2) cumulative win/loss percentage.
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Calculations:
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Total volume = Total pounds., kilograms, Metric Tons, square feet, or gallons from sales records
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Total revenue = Sum of volumes * selling price
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Total gross margin = Total revenue – rebates – total cost
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The following sections should be available to the calculation results of the quote on line item level:
When revising a deal, per line the current active quantity (per approved deal) and the delta quantity (per revision) should be visible. Similar for the invoice price and the margin / margin %.
Another section should contain competitor pricing. It should show the median, plus the lowest competitor price. Showing the 5 competitors will show a list with the corresponding prices.
The analytics section will show the following elements:
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Margin alert gauge
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Inline analytics chart that shows a bar chart over time with the revenue and the average price of the period for that product and customer combination
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Inline analytics for benchmark chart: this shows a scatter chart that has different transactions for a period of time (last 3 months) for this product, with the price and volume on the axis
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Margin break-even:
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This chart shows the quantity vs. revenue (absolute) and plotted what the delta in volume should be with the new (lower) price to land on the same absolute margin.
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Margin break-even: similar as the previous one, but then showing the margin (absolute) instead as revenue (absolute)
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Header waterfall showing a general overview of the header waterfall of the revised agreement
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Item waterfall showing an overview of the item waterfall of the revised item
Non-functional requirements
This use case has as a prerequisite that CHEM01 - Improve long-term agreement profitability by automating complex formula-based pricing, or CHEM09 - Improve margin, speed, and quote win rate with guided selling and decisions support, have been implemented. CHEM10 is an extension of these.
User Stories
These are the user stories and epics that make up this use case.
Data Requirements
The following tables can be either manually loaded in Pricefx via Pricefx Excel Client or can be automatically integrated using CSV files in a Pricefx dedicated SFTP folder:
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Price Waterfall data (typically based in invoice line items)
Out-of-Scope
Out-of-scope business functions and features can be configured, but are not included in the Chemical Industry Catalog.
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Implementing quotes or agreements; this use case is an add-on to CHEM01 - Improve long-term agreement profitability by automating complex formula-based pricing, and/or CHEM09 - Improve margin, speed, and quote win rate with guided selling and decisions support.
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Any Reporting and Dashboards, other than the ones explicitly mentioned above
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Notifications and alerts
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API method integration
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Customer-Facing templates
Solution Design
The solution design for this use case is still in progress and will be published as soon as it becomes available.