The Top 5 Pricefx Features for Your Chemical Company
With the current rate of change taking place in the marketplace, chemical companies are losing revenue daily because their pricing processes do not have the ability to track fluctuating commodity prices or identify end-product value. Guesswork, hunches, and spreadsheets were okay once upon a time, but times have changed. What used to be your chemical company’s pricing department ‘go-tos’ simply don’t work anymore. Instead of allowing your sales teams to continue to rely on hunches and hearsay without assistance, the time finally feels right to take advantage of the deep and useful insights that modern pricing software can provide. That is why we decided to take you on a journey of the Top 5 pricing features that Pricefx can offer your chemical business.
At Pricefx, we have been assisting chemical companies for more than 10 years now to make real-time and data-informed pricing decisions. And that technological help allows them to protect their profits and evolve into becoming agile and robust pricing organizations.
In this article, we will analyze the Top 5 pricing features Pricefx offers chemical companies and how when implemented those features can save your business time and money.
Pricefx’s Top 5 Pricing Functions for Chemical Companies
Let’s jump straight in and take an initial glance at the Pricefx Top 5 pricing software functions that directly benefits chemical companies, before we later go further in-depth and examine how each may help you in your pricing endeavors.
(As a disclaimer, two important things to note;
The relevance of the information below is dependent on your chemical company attaining a certain level of ‘pricing maturity’ or not and;
This is not intended to be an exhaustive list but instead covers the main pricing pain points that chemical companies are answering daily with the Pricefx solution);
- Pricing Analytics
- Benchmarking against Competitors – Pricefx Plasma
- Sales Enablement
- Cost Recovery
- Fully Integrated Rebate Management
1. Pricing Analytics
Analytics are a foundational building block for capturing value through pricing. Perhaps your company is already practicing what might be called “legacy” analytics – beyond using Excel spreadsheets, but manipulating data in some kind of Business Intelligence Software (BIS) like Tableau or Microsoft Power Bi? This enables visualization of low hanging fruit, but what is then done with the insights? In reality, it’s nowhere near as insightful or helpful as you thought it was going to be.
Sure, that BIS tool you have makes pretty graphs and neat dashboards, but it’s kind of ‘style over substance.’ Is it:
- Helping you to better perceive, interpret and predict the impact of the prices on your strategic business goals? or;
- Is it preparing data simply through undefined queries, so that you can use the accompanying data visualization software to create reports and dashboards?
If you answered “Yes” only to Number 2, then it is time to discover “enhanced” analytics – what a proven Price Analytics tool can do for your business.
Pricefx’s Price Analytics data science deals with predictive analysis and prescriptive analysis of your key performance indicators, while that of BIS deals with descriptive analysis. Other factors that differentiate the two are scope, data integration, and skill set.
In other words, the scope of the data science of pricing analytics is simply wider and you can do more with it. While BIS tools are great for individual use, they were never designed for the depth of analysis involved for multiple users across multiple jurisdictions.
For example, imagine your chemical company manufactures only three types of vehicle windshield cleaner and insect remover: summer, winter, and standard for your markets with friendlier and temperate climates. You have set your pricing strategy to accommodate the 5 preferred business outcomes below;
- Increase Sales volume on your winter windshield wash as it costs more to produce and you are looking to lower the costs of production
- Implement a standard 10% profit margin on your summer windshield wash
- Implement a standard 20% profit margin on your standard temperate market windshield wash as it is your biggest seller and;
- You want to apply all these rules in every market you sell in except for Australia and New Zealand, where a standard 40% margin applies across all your windshield wash to cover your extra shipping costs from your ecommerce site.
- You want to set these outcomes for re-assessment every 6 months.
With the AI (Artificial Intelligence) of Pricefx’s pricing analytics software, all five of these business outcomes can be built into a single pricing rule to automatically calculate your prices globally.
2. Benchmarking against Competitors – Pricefx Plasma
Many directors of pricing at large enterprise chemical companies have been saying for many years that their companies have benchmarked themselves in functional areas like supply chain, finance, or manufacturing to show comparative performance against the top companies in the industry.
However, there hasn’t previously been a benchmarking framework that could provide the data to accurately substantiate those claims in the field of pricing. It is extremely important pricing software functionality to have in your toolbox. Critically, it’s great to know how your business is doing against those doing the best job in pricing across your industry, but also because change continues to come in the marketplace at faster and faster rates, it’s important to understand performance against the best across all industries.
Pricefx Plasma enables you to track what and how well other companies are doing in their business so you can stay ahead or indeed, catch up to what your competitors are doing, and industry in general.
Looking at an industry like chemicals, which is slower to change, the future is going to look different for them. The change has already begun and those chemical industry businesses that move at a faster pace and are more eager to respond to customer requests and inquiries faster, are suddenly at the front of the queue. Measuring their performance against other industries that are doing things faster and better is important for them to set their vision and direction for the future to be more responsive to customers.
Pricefx Plasma has unique pricing software functionality and with that, a fantastic opportunity to benchmark and compare. Many safety and environmental issues occur in chemical plants that naturally make you careful and inherently resistant to change. However, that is beginning to transform due to necessity and generational shift and as such, the Pricefx Plasma benchmarking tool provides the perfect opportunity to stay ahead of your competitive pack.
3. Sales Enablement
More than ever, customers are demanding quicker response times across all industries, and the chemical industry is not immune. As we have just discussed, the chemical industry has been notoriously slow in adapting to the new ‘normal’ – speed wins business.
Today’s customers (regardless of industry) have expectations based on their home shopping experiences. At home, they get an immediate price on Amazon, so why can’t they or why shouldn’t they expect the same from your chemical company? In the modern world, why should any customer be waiting a week or even two for you to get back to them on say, how much five truckloads of acetic acid are going to cost?
If you are trying to manage all the items on your chemical price lists manually in a labyrinth of error-prone spreadsheets or a CRM (Customer Relationship Management) or ERP (Enterprise Resource Planning) that was never built for the task, automated quoting is a functionality of the Pricefx system that many companies find helpful.
Additionally, the results can display automatically in your CRM system, enabling sales to leverage without logging in to another system or tool.
What’s more, the speed and accuracy of the tool helps build confidence in your customers.
Instead of a week or two, getting back to your customer for that quote on the abovementioned five truckloads of acetic acid took only a matter of hours.
In order to survive in a fast-moving market, Pricefx Quoting replaces time-consuming, labor-intensive (and potentially error-prone) pricing processes with accurate, streamlined automated workflows allows you to execute mass price updates while improving accuracy, consistency, and speed.
The quoting and negotiation processes are pain-free and supported to accelerate turnarounds and close more deals.
Optimal prices (powered by the underlying analytics) and price guidance for specific quotes or transactions help your sales teams to project and identify upsell and cross-sell opportunities.
4. Cost Recovery
For a myriad of reasons from the global pandemic to the war in Ukraine, we have been in a very inflationary environment over the last year or two. In that light, a key price sensitivity in the chemical industry is margin management. Given the extreme rate of price fluctuation and inflation, how can you as a chemical company be certain you are covering your costs? And no matter how proactive you are, there always seems to be a lag factor involved.
Your costs may increase, but you are required to wait before you can raise prices because you have a notification clause. Sure, you can tell your customers prices will increase, but you can’t apply it to invoices for 15- or 30-days due to requirements in your contracts. Meanwhile, your business is eating those cost increases for 15 to 30 days.
Wouldn’t it be great to pass on the cost changes faster, as the faster you can pass them on, the better off you are?
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Everyone knows that most chemical companies are affected by commodity price fluctuations in their pricing. In those commodity-oriented areas where price information and raw-material visibility is public and index-based pricing is an important cost recovery mechanism for companies.
Pricefx’s robust Price Setting capability takes multiple data sources into your price setting whenever your pricing strategy requires it. Two features are particularly relevant for chemicals:
- Formula and index–based pricing: Whether it is every month, every week, or every quarter that commodity prices are changing, Pricefx can automate the price calculations that need to be done. Eliminate the need to re-key data into a system or an Excel spreadsheet to do the calculations and dispose of the requirement to re-key a price result into your ERP and apply it to your invoices.
- Mass price changes: Specific, targeted increases can be executed rapidly across products, market segments, and/or regions, informed by the above–mentioned “enhanced” analytics to address cost recovery or other goals.
With Price Setting, take errors out of your system, making it automatic to manage cost recovery pricing strategies like commodity and raw material index fluctuations.
5. Fully Integrated Rebate Management
What business or customer does not love a rebate, promotion, or discount? Managing your company’s rebates, discounts, and promotions is important work, and obviously you want to offer them to your customers to drive your product, market, and customer strategies, secure deals, and/or reward your long-standing clients for their loyalty and on-going business.
On the other hand, do you always need to be offering your clients a discount if taste for your products develops, or suddenly, you are the only business in the country who still has a supply of your products? Sure, you want to drop the discounts and on-going promotions and value-price, but is your pricing technology agile enough to perform the update to your rebate management in real-time?
And is it fully integrated to take advantage of in-built pricing analytics optimizing your price setting?
For example, if you are currently experiencing high demand for your urea-based fertilizer, does it still need discounting? Time to ditch the promotions and rebates on that product ASAP and add extra to your company’s bottom line?
Your Excel spreadsheets and the manual labor involved were never designed to manage a modern end-to-end rebate program to give integrity to your discounts, promotions, and rebates. If your rebate management is not receiving the attention and level of modernization required, your business goals are at risk of falling out of reach.
Pricefx’s Rebate Management function has its own specific module as part of the Pricefx pricing solution. It can be implemented quickly so that you can get started providing value to your company and your customers ASAP.
Rebate Management defines, evaluates, simulates, automates approvals, workflows, customer documentation, builds accruals, automates payouts and provides monitoring for rebates.
By focusing on standard rebate templates and reducing manual involvement, you can not only reduce complexity and effort but also the risk of painful mistakes while achieving business goals and becoming more profitable than you thought possible.
Most importantly in combination with pricing analytics, Pricefx’s Rebate Management gives visibility to your salespeople to Continually understand customer rebate performance, so the customer can meet rebate targets and the sales team can achieve expected sales performance.
Discovering How to Use Pricefx to Implement Your Pricing Strategy
After reading this article, you know the Top 5 Pricefx features that can enhance and modernize your chemical company’s pricing and transform your pricing strategy into positive outcomes for your business.
Or perhaps you are still investigating your journey with pricing software solutions and need more information on how to implement a price strategy? (Check out the article below) ;
However, if you already have your pricing strategy in place and this article has confirmed that Pricefx is the pricing solution that your chemical company needs, then you will want to talk to one of our pricing experts to get started today;
About the Author
Robert Smith has over 40 years of experience in the chemical industry in a variety of operations and business roles. Included in this is over 15 years of experience in leading and driving change in pricing management, as well as implementing pricing software solutions to support price and margin realization. He now leverages his background in these areas as a Customer Success Executive at Pricefx to help customers realize value through their use of the extensive capabilities of Pricefx.