The distribution industry, a cornerstone for global manufacturing and making sure the ingredients of production need to get where they need to be and when, faces a unique set of pricing challenges. Volatile fuel prices, ever-shifting market dynamics, and a diverse range of customer needs all contribute to a complex pricing landscape. Distribution companies, striving for both efficiency and profitability, often find themselves entangled in a web of manual processes and siloed data, hindering their ability to react swiftly and optimize pricing strategies. This is where the ability to automate and scale your organization’s pricing emerges as a powerful tool, offering a way to untangle the complexities of distribution pricing and propel companies towards a more agile and profitable future.

At Pricefx, we have more than a dozen years’ worth of experience supplying innovative solutions at the forefront of the pricing industry. As the world’s leading enterprise-grade native-cloud pricing software vendor, we take immense pride in our development of emerging technologies to help solve top-line business problems and boost profits and growth for our clients. Our Ai-informed pricing solutions empower distribution companies to automate and scale their pricing, enabling them to:

1. Automate the execution of supplier cost updates with necessary approval workflow.
2. Quickly calculate and publish new price lists based on supplier cost changes or changes to pricing strategy.
3. Design and deploy new pricing strategies using drag-and-drop “no-code” configuration and:
4. Eliminate unearned discounting by utilizing automated rebates with accruals and payouts

By focusing on those four key areas,  Pricefx's automated solutions transform the way distribution companies approach pricing.

So, let’s get straight in and dive into greater detail on how Pricefx makes each of these 4 outcomes a possibility.

1.      How Pricefx Helps with Supplier Cost Management & How Distributors Benefit

There are 3 main Pricefx capabilities that help distributors manage supplier costs effectively:

• Blended cost calculations for accurate profit margin analysis
• Automated price re-calculation with new supplier cost data and  syncing to systems like ERP
• Automated cost approval workflows in costing grids for better visibility and quick response to cost issues

Note that the benefits discussed here are configuration-dependent and unique to each distributor.

Now, let's delve into the details.

A. Blended Cost Calculation for Current On-Shelf Products

Blended cost calculation is a critical component for businesses managing on-shelf products, particularly in environments where costs fluctuate due to varying supply sources, market conditions, or manufacturing processes.

Pricing software can streamline this complex calculation by integrating real-time data from multiple sources, such as procurement, production, and logistics. This enables businesses to accurately determine the true cost of on-shelf products, reflecting a blend of historical and current costs. By automating this process, pricing software not only ensures more precise pricing strategies but also enhances profitability by reducing the risk of underpricing or overpricing due to outdated or inaccurate cost assessments.

B. Automated Cost-Based Price Recalculations & Syncing to Third-Party Systems

When distributors rely on manual methods to update price lists with the latest supplier cost information, their price re-calculations often proceed slowly, resulting in delayed or error-prone pricing that fails to reflect current market conditions. An even more significant issue is the frequent occurrence of margin compression when outdated pricing is used regularly.

Implementing automation in price updates facilitates a more rapid price re-calculation process and, importantly, ensures prices remain competitive and consistent with the latest supplier costs. Integration with third-party systems via our platform guarantees that cost-based price updates are always visible in ERP and other interconnected systems.

By having price adjustments calculated and displayed in real time within their third-party systems, distributors can seamlessly adapt their pricing to ad hoc supplier cost fluctuations, mitigating persistent errors or margin erosion and supporting healthier margins overall.

C. Automated Supplier Cost Approval Workflows in Costing Grids

In distribution, fluctuating supplier costs can delay up-to-date pricing due to manual cost approvals, questioning price list accuracy. If a set of costs is approved and changes again, prices become unreliable.

Costing Grids allow cost managers to set approval levels based on impact severity. Minor impacts may need managerial approval, while severe ones require higher-level endorsements. Managers can easily see which costs need attention through visual impact indicators. The system also allows mass approvals and tracking of pending items by adding watchers. Customizable and automated workflows enhance approval efficiency and give insight into supplier costs affecting margins for prompt action.

Check out the video below on Pricefx’s Actionable Insights tool which can be used to monitor cost changes (spare parts, suppliers, products with frequent price changes etc.) that can be easily missed in your price list updates and lead down the unfortunate margin erosion path. Use this or a tool like it to ensure that your costs are kept up to date and are passed on in your company’s pricing.

2.    How Pricefx Helps with Quick Price List Recalculations & Pricing Strategy Changes

Distributors need to recalculate and apply pricing changes quickly to drive revenue growth in a dynamic market. Price changes can happen daily, weekly, or monthly across different segments, depending on market conditions, strategy shifts, or supplier costs. Calculating and communicating these updates in a timely manner is complex and time-consuming, and it can lead to errors and margin loss.

Distributors need a powerful capability that enables real-time pricing updates based on new inputs and logic. These updates should integrate seamlessly with ERP systems, ensuring accurate and efficient pricing implementation. This capability offers significant benefits, such as increased margins from faster and more frequent price updates. It also addresses margin compression by reducing manual errors and ensuring timely pricing adjustments. The key performance indicators (KPIs) for success are margin improvement and price realization from more agile and frequent pricing changes.

The formula for success is multi-faceted: Margin improvement is driven by the combined impact of accurate cost tracking, optimized pricing strategies, reduced manual errors, and enhanced price realization. By leveraging these elements, distributors can protect their margins while capturing revenue opportunities in a rapidly evolving market.

To learn more about how proactive price list updates can save your business time and money, check out this helpful article:

Price List Impact Simulation

Pricefx helps you improve your pricing by simulating how mass price list changes affect your sales and profit. You can face many challenges that lower your profit, such as higher supplier costs, slow shipping, or higher customer demand. To overcome them, you need to:

• Compare different pricing scenarios and their outcomes.
• Change prices for many products, customers, or places at once.
• Integrate your pricing system with your other systems, like CRM or ERP, for easy and fast price list and contract updates.
• Avoid mistakes and delays when changing prices.

This way, you can:

• Boost your profit by changing prices often and smartly.
• Keep your profit by avoiding errors and being on time with price updates.
• Increase your profit with better decisions.

This capability helps you improve your profit by changing prices better and faster.

Watch this video to learn more about simulating the impact of price list changes:

3.      Benefits of Pricefx’s ‘No-Code’ Pricing Strategy Designer for Distributors

Pricefx's Strategy Designer, an application of Visual Configuration, transforms the skills needed for developing pricing strategies and the duration of the setup process. Discover more about Pricefx's Visual Configuration and Strategy Designer by watching the informative video below.

Through an efficient pricing strategy design and deployment process, distributors significantly reduce downtime in their reactivity to the market, resulting in more captured profitability opportunities. And, with extensive IT resources no longer needed for setting up new pricing strategies, companies should expect significant savings in labor expenses.

With Strategy Designer, distributors enjoy these benefits:

• Quick strategy design: Use the visual interface to create and adjust pricing strategies without costly technical resources or delays.
• Better pricing effectiveness: Test and preview your strategies live with instant visual feedback and fine-tune them easily.
• Instant deployment:  Deploy your strategy code in one click and see it take effect across your Pricefx system.

How to measure success? Track revenue growth and cost savings KPIs. You will capture more profit opportunities and save on labor expenses with an efficient pricing process.

4. How Pricefx Eliminates Unearned Discounts - Use Automated Rebates with Accruals and Payouts

Rebates can boost revenue and retention for distributors, but they also pose many challenges. They need approval, documentation, accrual, monitoring, and payout from different parties: sales, pricing, product, and finance. Each has distinct roles and interests, leading to inefficiencies and misalignment.

Pricefx and Enable together can help you employ a smooth process and optimal customer experience require an integrated framework that manages all aspects of rebates.

This framework improves efficiency, reduces manual work, and aligns all parties, enhancing the rebate strategy's effectiveness. The performance indicators measure rebate outcomes against volume or revenue goals and compare actual and target values over time. An integrated approach simplifies rebates and helps distributors achieve their business goals.

For more insights on how to make rebates a key part of your pricing system, read our Pricefx and Enable rebates eBook:

Pricefx: A Foundation for Sustainable Distribution Industry Growth

Navigating distribution pricing complexities requires automation, accuracy, and data-driven insights. Pricefx offers a solution that covers all these areas by automating tasks, ensuring errors are minimized, and providing valuable data analytics. This helps distribution companies:

• Increase Efficiency: Freeing time for strategic initiatives.
• Enhance Accuracy: Ensuring fair and consistent pricing.
• Improve Profitability: Protecting margins and capturing product value.
• Build Stronger Customer Relationships: Trust through accurate pricing and timely rebates.
• Make Data-Driven Decisions: Using real-time market insights.

These benefits lead to a more agile and profitable future for distributors, helping them adapt to changing markets and secure long-term success.

To understand the value of investing in Pricefx for your business, read the useful article below:

We trust you have enjoyed learning some of the top ways that Pricefx can assist in managing your omnichannel pricing needs. However, every business is different and unique in what it may require.

If you are interested in exploring the different integrated packages Pricefx offers and to learn more about which might be the best for your business to start with, head over to this article linked directly below:

Meanwhile, Happy & Profitable Pricing!