«  View More Posts

Pricing Automation in the Manufacturing Industry: Top 4 Uses

March 12th, 2024 (Updated 03/13/2024) | 9 min. read

By Jose Paez

In a competitive sector like the manufacturing industry, businesses often grapple with a perpetual dilemma – the inefficiency of conventional pricing methodologies to adapt swiftly, accurately and assist in executing your company’s business goals. The era of depending on conjecture, intuition, and unwieldy spreadsheets is over. Now, a revolutionary level of pricing automation has emerged that can assist your business scale its pricing processes as your organization grows.

Having devoted over a decade to partnering with and supporting our clients in the manufacturing industry, Pricefx has been instrumental in establishing automated, real-time pricing processes tailored to our customers. Our overarching objective is to not only optimize your current pricing strategies but also to set you up for success in the future too. By leveraging data-driven decisions and automation, our aim is to enable manufacturing businesses to work smarter, not harder, fostering profitability and fortifying them for sustained success.

Here’s where price automation comes in and how it can help you scale your pricing processes as you grow. In this article, we’ll walk you through 4 ways that manufacturing companies can bring automation into their pricing setup, look at some mini-case study examples of how you might use the technology and of course, how your organization will benefit.

Let’s get started with the first of the top 4 use cases of pricing automation for manufacturing!


1. Efficient & Optimized List Price Recalculation Based on Your Pricing Strategies

With manual price list updates, it can be time-consuming and error-prone to ensure that your list prices are always aligned with your pricing strategies. Pricing automation can help you automate this process, saving you time and effort. You can define your pricing rules and logic, and the software will automatically update your list prices based on these rules. This will ensure that your prices are always competitive and fair, and that you are always getting the best possible return on your products.

Failure to update your price lists regularly can be costly. Marginal improvements in pricing will almost always have a more significant impact on your profit figures than marginal improvements in sales numbers. Instead of only asking yourself, “How can we increase sales?”—your business also needs to be asking – “How can we capture as much of the value as we deliver to our customers in the form of price?”

Frequent updates of your manufacturing company’s price lists can help ensure you are reaching a wide audience, increasing margins, and maximizing your bottom line.

What’s more, with Price List Impact Simulation capability, your organization can assess the potential business impact of your price list updates before they occur, while involving all elements of the price waterfall in your simulation and how that sits with your business objectives. Learn more about it in the video below:


Mini-Case Study: Imagine a growing manufacturing company that produces electronic devices. As the company expands its product line and enters new markets, manually recalculating list prices becomes increasingly challenging, more error-prone and time-consuming.

By implementing pricing automation software, the company can easily adjust list prices based on factors such as production costs, market demand, and competitive pricing, allowing them to scale their pricing processes efficiently as their business grows.

And with the added benefit of price list impact simulation, they can use the insights gained to set the pricing strategy most likely to succeed for the company in the future as its operations expand.


2.  Automatic Recalculation of Dependent Price Lists (by Region, Country, Sales Channels etc)

For manufacturing companies with complex pricing structures, it’s important to have the ability to update prices across multiple levels at the same time. Pricing automation can help you update this process, so you do not have to manually update multiple price lists and risk the common place errors that manual price list updates are prone to.

You can define your pricing rules and logic (by Region, Country, Sales Channels, etc. – whatever suits your organization’s business goals,) and the software will automatically update all of your price lists based on these rules. With pricing automation, companies can automatically recalculate dependent price lists based on specific criteria such as geography, sales channels, or customer segment. This ensures consistency across different markets and channels while streamlining pricing operations.

This particular automation is beneficial because it allows the organization to better differentiate between different markets and automate the price setting process ensuring alignment of price to value across all those diverse markets.

Mini-Case Study: Consider a manufacturing company that sells automotive parts to customers worldwide. With a diverse customer base and multiple sales channels, managing dependent price lists manually becomes overwhelming as the company expands into new regions. By leveraging pricing automation software, the company can automate the recalculation of dependent price lists based on factors such as currency exchange rates, shipping costs, and local market conditions, enabling them to scale their pricing operations seamlessly across different regions and sales channels.

To learn more about the benefits of quality price list management, check out the handy article below:


3.  Calculate and Process Accruals and Payouts

Rebates and discounts are a common way for manufacturing companies to reward customers for their business. However, manually tracking and calculating rebates and discounts can be a time-consuming and error-prone process. Pricing automation can help you automate this process and ensure that you are always getting the best possible return on your rebates and discounts. You can define your rebate and discount rules, and the software will automatically track and calculate your accruals and payouts. This will ensure that you are always getting paid on time and in full, and that you are not losing money on rebates and discounts.

Mini-Case Study; Managing agreements through automated software like Pricefx’s Agreements and Promotions can suddenly bring more visibility and clarity to what your price agreements are and how appropriate they are for your company and how long they have been in place. For example, if you have a customer that made a price agreement with you and they made volume purchasing commitments to buy 75 000 units of products, are they actually purchasing or on track to purchase those 75 000 units in the specified timeframe? Are they committed to buy? As a result, you can measure how your customers are performing against their sales performance targets in a much clearer way and remind yourself why you are offering them a special price in the first place.

As a manufacturing company that offers volume-based discounts and is expanding its product portfolio and customer base, if you are manually tracking and calculating rebates, discounts and other promotions, it can become increasingly complex and prone to errors. By implementing pricing automation software, your company can automate the calculation of accruals and payouts based on actual sales data, ensuring that customers are rewarded accurately and on time. This allows your company to scale its rebate management processes efficiently as your business grows.

To learn more about making rebates a critical component of your manufacturing company’s pricing system, check out our ultimate Pricefx and Enable rebates eBook:


4.   Define & Maintain Standards and/or Customer Specific Discounts & Surcharges

As your business grows and your product portfolio expands, you may need to introduce a variety of discounts and surcharges to accommodate different customer requirements. Consequently, many manufacturing companies often offer standard (or sometimes customer specific) discounts and surcharges to customers based on various factors. Manually managing these discounts and surcharges can be time-consuming and error prone. Like the scenario explained above on managing rebates, with pricing automation, companies can define and manage standard discounts and surcharges effortlessly, ensuring consistency and transparency in pricing across different customer segments, sales channels, regions etc.

The automated process can flexibly considering business-relevant criteria for price differentiation (which is not limited by a company’s existing data structures in systems), allowing for enormous savings in time and effort (and in turn, it is a cost saving too!), ensuring that your pricing is always accurate, compliant and aligned with your achieving your business goals.

Mini-Case Study: Consider a manufacturing company that needs to define and maintain standards for customer-specific discounts and surcharges. As the company diversifies its product offerings and customer base, manually managing these discount and surcharge standards becomes increasingly complex and prone to errors. By harnessing the power of pricing automation software, the company can establish and automate standard discount rules tailored to factors such as order quantity, customer segment, and contract terms. This ensures that discounts and surcharges are consistently and accurately applied across relevant sales transactions, streamlining the process as the company scales its operations.

For instance, as the company expands its clientele and serves a more diverse range of customer segments, it may need to establish standard discounts for government contracts, specialized discounts for boutique products, or implement surcharges for same-day rush orders. With pricing automation, these discounts and surcharges are automatically applied to the appropriate orders, guaranteeing consistent and precise pricing practices as the company continues to grow and adapt to evolving market demands.


Engage Your Sales Team in the Insights of Pricing Automation

Now you know that pricing automation has emerged as a crucial tool for manufacturing companies striving to navigate the complexities of today’s market landscape. By streamlining pricing processes and leveraging automation tools, companies can optimize their pricing strategies, streamline operations, and maximize profitability.

From efficient list price recalculations to automatic recalculation of dependent price lists, accurate accruals and payouts, and defining standard discounts and surcharges, the pricing automation offered by a quality solution like Pricefx supplies a myriad of benefits for manufacturing companies.

But how to do you get your sales team involved in using the technology to gain those pricing insights? To learn more on engaging your sales department to dance to your organization’s overarching pricing tune, check out this handy article below:


Meanwhile, happy automated and data-driven pricing!

Jose Paez

Director - Solution Strategy , Pricefx

Jose is the Director of Solution Strategy at Pricefx, with more than 15 years of experience as a pricing practitioner. In his career, he has led in every aspect of pricing from analysis and optimization to pricing strategy definition and execution. His experience in driving and implementing initiatives in digital transformation has given him insight into the typical roadblocks organizations face and the best paths to release the untapped potential of pricing organizations.