Local and Global Pricing Insights

Revenue Control: Continuous, Incremental Profit Improvements

Posted by Stratinis on 21-Jun-2017 12:46:18

Controlling revenue in B2B, as well as B2C, means being on top of what prices and discounts are offered to each customer. 

Typically, a revenue control flow can be something like this one:

Revenue Control Flow

  1. Current prices and conditions are imported from e.g. SAP ERP or other ERP systems.
  2. The Revenue Control software, in this example Stratinis Pricing Suite (SPS), calculates pocket prices and other KPIs relevant for revenue control
  3. In the software various simulation scenarios can be run by sales people, pricing managers or data marketing teams.
  4. Scenarios can be analyzed manually or automatically against benchmarks, e.g. industry peers or internal target prices or floor prices.
  5. Once happy, the user submits the request for approval, and depending on how close or far the price(s) are from Floor Prices or Target Prices, then the request is sent through an increasingly elaborate approval workflow.
  6. When approved, the updated prices and conditions are sent back to e.g. ERP or an e-commerce site, or both, so next time the  customer orders he will see the new prices.

The above example flow is an out-of-the-box feature in Stratinis Pricing Suite and be set up in a very short period of time. 

The advantage of having such a process is that each change in pocket price can be quickly measured against benchmarks and depending on how good the final price is, then either no approval is needed, or it is increasingly difficult for the sales people to get approved if the pocket price is very low. By repeating the process over and over for every price given (can be highly automated, in order to not delay decision processes) some of worst prices in the past are eliminated, and generally new prices conform to company targets. Over time that means better pocket prices overall.

It is a great way to get incremental pocket price improvements in most businesses. Install such a system and over 6-12 months pocket prices will have improved 2-5%.


Topics: Pricing, Stratinis, revenue control, floor prices