Part VII — How Sophisticated is Your Pricing?
HAPPY NEW YEAR!
Well it seems to be time to get back into the “work swing” of things and finish up this 10-part series, “10 Ways Inventory Management Can Make or Break You.” Part VII asks you to think about how sophisticated or complex is your pricing, or maybe your current system cannot handle any degree of complexity and you wish that it could. You want an Inventory Management Systems that can handle multiple types of customers, i.e. retailers and wholesalers, and multiple pricing discounts and levels for just one item — i.e. list, margin/markup, promotional discounts and the ability to break into price levels within. Therefore what this probably all suggests is you should really think about how or what prices you extend to all your customers and build onto all your inventory items.
This next section gives you an idea of what you might look for in an inventory management program in relation to your pricing. If you wish to read this white paper in its entirety, 10 Way Inventory Management Can Make or Break You, click here.
Part VII: How Sophisticated is Your Pricing?
Having the ability to set up and automate pricing can be priceless and may only be possible if Inventory Management is used. In fact without a good Inventory Management system integrated to your point of sale or order entry, it is likely that the sheer logistics of communicating and managing complex pricing limit your options.
A good Inventory Management system can accurately track the cost of the items you are selling or using as raw materials and make it possible to set promotional prices temporarily for a sale or some other campaign. You can also have the system identify your customers and automatically adjust pricing accordingly. This is useful for businesses that have wholesale and retail pricing or for contracts in which a certain customer is allowed set pricing based on a contract.
What you should look for is software that provides numerous pricing structures and methods with the ability to maximize your profit without involving salespeople or clerks. This saves you time, labor and errors because all pricing changes are made behind the scenes without mistakes. All the clerks need do is enter the item in the register.
In the end a good integrated system makes it possible to see the impact of your pricing methods, evaluate their success and make it possible to further refine pricing to maximize profit.
What pricing structure do you have in place? Are you leaving profit on the table? Are you limited by your ability to effectively incorporate more complex pricing?
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