An Open Letter to Distribution and Manufacturing Leaders

Dear Distribution and Manufacturing Company CEO, CFO, and Chief of Sales,

Let’s start with some sobering numbers. According to Statista, the average compounded annual growth rate for manufacturing in Europe is expected to be a mere 0.82% until 2029. Yes, you read that correctly—less than 1%. Meanwhile, distribution companies can expect a slightly rosier picture with a growth rate of 5.1%, per Business Research Insight. Better, but still not exactly champagne-popping territory.

So, what’s the catch? Why are we stuck in this growth quagmire? Well, you’re already juggling a plethora of challenges: macroeconomic uncertainties, political instabilities, and mounting sustainability requirements, just to name a few. And let’s not forget digital transformation—your constant companion for the past few years, often yielding questionable returns but still an essential strategy in the new digital age.

As the global leader for pricing software technologies, we’ve worked with several multinational enterprises who faced the same challenges you’re facing today and are now successful because they understood the importance of getting pricing right.

Now, the last thing you probably want is another complex issue vying for a spot in your top priorities. But here's the kicker—you absolutely need to make room for it. I’m talking about pricing.

Why Should You Care About Pricing?

Allow me to drop some data-driven wisdom, courtesy of Pricefx, derived from dozens of companies where we’ve been granted permission to use performance data anonymously:

• For a company with €5 billion in revenue and an average 10% gross margin, inefficiencies, lack of visibility, poor sales data execution, and static price management leave an average of €59 million on the table. Yes, you read that right—€59 million just sitting there, unclaimed.
• By leveraging an AI-powered end-to-end pricing platform like Pricefx, you can capture an additional 8.6% margin improvement. That’s another €43 million directly boosting your bottom line.

In total, you’re looking at over €100 million per €5 billion in revenue that you’re currently ignoring. It’s like leaving the keys to the Ferrari in the ignition while you continue to take the bus.

The Hard Truth About Revenue

To generate €100 million in bottom-line profit through traditional means, you’d need to add €1 billion in revenue, assuming a 10% gross margin. How many initiatives are you currently running that promise an equivalent impact in the next 12 months? And more importantly, how sustainable are they year after year?

Time for a Priority Overhaul

If you’re sitting on the board of a corporation in process manufacturing, discrete manufacturing, or distribution industries, it’s time to elevate pricing to one of your top three priorities. Pricing should be an integral part of every digital transformation initiative you undertake. In fact, it has the potential to re-finance your entire digital transformation journey.

Can You Afford to Ignore Pricing?

So, here’s the million-euro question: Can you afford to ignore pricing any longer? The numbers suggest you can’t. The opportunity cost is simply too high. It’s time to shift your perspective and recognize pricing as the crucial lever it is—one that can significantly boost your profitability and sustain your business in these challenging times.

After all, if you’re willing to pour millions into digital transformation with uncertain returns, why not invest in a strategy that not only promises but delivers substantial financial gains? It’s not just smart; it’s essential for your business’s future.

So, dear executive, let’s make pricing a priority. Because leaving €100 million on the table is one luxury your business can’t afford.

Yours strategically,

Thomas

Feel free to reach out if you’d like to discuss how we can help you unlock these hidden profits and turn pricing into your next big success story.