© 2009 evergreen consulting, llc all rights reserved strategic pricing for distributors™ 1...
TRANSCRIPT
© 2009 Evergreen Consulting, LLC All RIghts Reserved Strategic Pricing for Distributors™
1
Strategic Pricing for DistributorsTM
MDM Webcast sponsored by InforOctober 29, 2009
Presented by Brent Grover & Ken Brown Evergreen Consulting, LLC
© 2009 Evergreen Consulting, LLC All RIghts Reserved Strategic Pricing for Distributors™
4
© 2009 Evergreen Consulting, LLC All RIghts Reserved Strategic Pricing for Distributors™
Strategic Pricing for DistributorsTM
6
Mining transaction data base
Customer Size
GT
M%
GT
M%
Customer Size
Desired orderly pattern Typical random pattern
© 2009 Evergreen Consulting, LLC All RIghts Reserved Sacred Cows of Distribution™
Premiums
Discounts
Average Margin
Premium/Discount Matrix
Margin %
Customer Size
Segment, Size, Sensitivity
DistributorPricing Structure
7
STANDARD MARGINEXAMPLE – VARIOUS SEGMENTS
average margin % for a sample sku
CUSTOMER SEGMENTS
STANDARD MARGIN
MRO 16.1%
OEM 18.4%
CONTRACTORS 24.2%
REDISTRIBUTORS 19.7%
INTEGRATORS 26.1%
©2009 Evergreen Consulting, LLC
STRATEGIC PRICING MATRIX
example – CONTRACTORS segmentmargins for a sample sku
VERY SMALL SMALL MEDIUM LARGEEXTRA LARGE
VERY HIGH 24% 21% 18% 15% 12%
HIGH 25% 22% 19% 16% 13%
MEDIUM 31% 28% 25% 22% 19%
LOW 33% 29% 26% 23% 20%
©2009 Evergreen Consulting, LLC
PREMIUM / DISCOUNT MATRIXpremiums & discounts from standard margin
FOR CONTRACTORS SEGMENT
VERY SMALL SMALL MEDIUM LARGEEXTRA LARGE
VERY HIGH +7% +3% 0 -7% -10%
HIGH +9% +5% +3% -5% -7%
MEDIUM +14% +9% +7% 0 -3%
LOW +16% +11% +10% +3% 0
11© 2009 Evergreen Consulting, LLC All RIghts Reserved Strategic Pricing for Distributors™
Strategic Pricing for DistributorsTM
FAQs
How much of a profit difference will Strategic Pricing make?
What makes Strategic Pricing work?
What does it take to get started?
How long does it take to obtain measurable results?
How much does Strategic Pricing cost?
Are the results are sustainable?
© 2009 Evergreen Consulting, LLC All RIghts Reserved Strategic Pricing for Distributors™
12
BASE CASE
150 BPS 200 BPS
SALES$50,000,00
0$51,000,00
0$51,370,00
0
COGS$37,500,00
0$37,500,00
0$37,500,00
0
GM$$12,500,00
0$13,500,00
0$13,870,00
0
GTM% 25.0% 26.5% 27.0%
EXPENSES$11,500,00
0$11,700,00
0$11,775,00
0
PRETAX NI
$1,000,000 $1,800,000 $2,095,000
ROS% 2.0% 3.5% 4.1%
EQUITY $7,000,000 $7,000,000 $7,000,000
ROI% 14.3% 25.7% 29.9%
Profit Power of Strategic PricingProfit Power of Strategic Pricing
Frozen
© 2009 Evergreen Consulting, LLC All RIghts Reserved Strategic Pricing for Distributors™
13
© 2009 Evergreen Consulting, LLC All RIghts Reserved Strategic Pricing for Distributors™
14
© 2009 Evergreen Consulting, LLC All RIghts Reserved Strategic Pricing for Distributors™
15
© 2009 Evergreen Consulting, LLC All RIghts Reserved Strategic Pricing for Distributors™
16
© 2009 Evergreen Consulting, LLC All RIghts Reserved Strategic Pricing for Distributors™
Strategic Pricing for DistributorsTM
17
How to start
How Strategic Pricing affects the organization
What it takes to get started
What is needed to succeed
18© 2009 Evergreen Consulting, LLC All RIghts Reserved Strategic Pricing for Distributors™
Strategic Pricing for DistributorsTM
Resources
Customer Profitability Analysis
Sales compensation plan design
Management & sales training
© 2009 Evergreen Consulting, LLC All RIghts Reserved Strategic Pricing for Distributors™
19
STRATEGIC PRICING FOR DISTRIBUTOR
S
Brent R. Grover
Tools & Rules to Optimize Your Margin
Brent Grover’s NAW BookshelfBrent Grover’s NAW Bookshelf
NEW 7/09
20
Boutique firm entirely focused on the W-D channel
Advisors to wholesaler-distributors, suppliers, marketing groups and trade associations
Strategy, growth through acquisition, strategic pricing, profit enhancement
Evergreen Consulting, LLC29525 Chagrin Boulevard, Suite 214
Cleveland, OH 44122
(216) 360-4600