Pricing professionals have a critical job on their hands – to deliver the best pricing strategy for profit maximisation.
To be able to deliver a robust pricing strategy, businesses must analyse their market, track pricing trends, study buyer habits & spending patterns. This will then allow them to constantly monitor the pricing strategies of their competitors. This in turn will allow them to deliver competitive prices that gain market share, optimise margins and achieve revenue goals.
Pricing Managers need to work closely with other departments, including purchasing and procurement, who will of course themselves be working hard at their own strategies to maximise profitability. As well as assessing and selecting vendors, procurement is heavily involved with negotiating terms and prices with suppliers and will be accessing supplier rebate programmes to get the best deal possible for all purchases.
|EXPERT TIP: DON’T RELY ON YOUR SUPPLIERS TO TELL YOU WHAT YOU ARE OWED.
WE HAVE SEEN DISCREPANCIES THAT CAN ACCOUNT FOR A SIGNIFICANT AMOUNT OF REVENUE.
USE YOUR OWN DATA AND KNOWLEDGE TO CALCULATE YOUR CLAIM.
In an ideal world, Purchasing and Procurement teams should be able to easily share all rebate data with the Pricing Manager, who can then use this information to devise a robust pricing strategy.
For example, if Procurement can thrash out a great volume rebate deal with a supplier on a certain line of products, the Pricing Manager can potentially set a highly competitive price on those products when sold on and still protect profit margins.
|EXPERT TIP: MANY PRODUCT LINES ARE NOT PROFITABLE UNTIL THE REBATE HAS BEEN RECEIVED.
IT’S CRITICAL THAT YOU UNDERSTAND THIS IN YOUR NEGOTIATIONS AND THE PAYMENT TERMS OF THE REBATE IS TAKEN INTO ACCOUNT.
THIS CAN HAVE A MASSIVE IMPACT ON BOTH CASH FLOW AND PROFIT.
Due the complexity of managing rebate agreements with suppliers – most of which are tied to volume, with the rebate only being earned once certain purchase thresholds have been met – it can be difficult to equip Pricing Managers with the right information to inform their strategies.
This is a particular problem for organisations who are still using manual processes for their rebate management methods.
By using a manual process, rebate deals and information are managed using spreadsheets and emails, which – aside from being prone to errors and omissions – limit efficiency and access to real-time information.
|EXPERT TIP: THE DATA IN SPREADSHEETS IS GENERALLY 4-8 WEEKS OUT OF DATE AND DIFFICULT TO USE FOR VALUE ADDING DATA INSIGHTS.
ONE CONTACT MISSED HITTING THE NEXT TIER IN A REBATE AS THEY DIDN’T HAVE ACCESS TO THE INFORMATION.
THIS HAD A DIRECT IMPACT ON PROFIT OF £30k.
In most cases, gathering important insights on supplier rebate conditions and potential rebate claims in a propitious time period is almost impossible for Pricing Managers – especially when dealing with multiple agreements across multiple suppliers, each with their own terms and conditions.
Rebate processes – and the crucial data they generate – don’t need to be so opaque, however.
By replacing spreadsheets and emails with powerful rebate management software, organisations can centralise all supplier rebate information in the cloud, meaning that everyone – pricing, purchasing and procurement included – can access, share and use it at the same time.
Rebate Management Software – Real-time Calculations and Access for All
Rebate management software provides the entire organisation with a single source of truth that anyone with the right permissions can access, to gain the insights they need to make the decisions that drive business value.
A supplier rebate is effectively a discount on the cost of goods sold – the difference being that the discount is awarded (as a rebate) not up front, but at a later date once the full amount has been paid and all terms have been met.
As such, considerable cost savings can be achieved through accessing supplier rebates. However, it’s imperative that Pricing Managers know precisely how much is being paid for goods once the rebate is applied, so they can set their own prices for the goods to be sold on accordingly.
This is incredibly difficult to do when relying on spreadsheets to perform complex rebate calculations and keep track of all agreements and rebate information – especially considering all the different types of rebates different suppliers offer.
As well as volume rebates, there are growth rebates, product mix rebates, retention rebates and many more besides. Only with real-time access to all rebate information can pricing professionals set competitive prices that maximise market share and protect margins.
With rebate management software, powerful calculation engines process all rebate data against your agreements in real-time – giving all team members immediate insights into where rebate cash flow is coming from, enabling better informed pricing strategies.
A good rebate management system will also send team members automated notifications to alert them when purchase thresholds are approaching. Not only does this ensure that opportunities to access increased rebate revenue aren’t missed, but pricing managers can then factor in the additional cost savings made on the products when setting prices to attract customers.
|EXPERT TIP: VISIBILITY OF THE WHOLE PROCESS ACROSS THE SUPPLIER CHAIN IN A SINGLE SOURCE OF THE TRUTH - INCREASED REVENUE OPPORTUNITIES >2%.
WHEN BUSINESSES ARE FOCUSING ON REVENUE RECOVERY AS A RESULT OF COVID-19, THERE HAS NEVER BEEN A BETTER TIME TO DIGITISE THE PROCESS.
Leverage Supplier Rebates to Optimise Your Pricing Strategy
Understanding the financial impact of accessing supplier rebate programmes is essential for building a winning pricing strategy for profit maximisation. This can only happen when pricing professionals have access to the right data at the right time.
To achieve this, rebate management software is the only solution.
Rather than relying on spreadsheets and emails, a purpose-built rebate management software system like e-bate automates every element of the rebate process, centralising agreements in the cloud to provide real-time access to the data all departments need.
Our sophisticated calculation engine allows you to track and analyse your rebate agreements in real-time and can be used for managing customer rebates as well as supplier rebates.
The e-bate platform is designed to eliminate spreadsheet reliance, improve communications and collaboration between departments, help companies manage pricing and increase revenues and profit – all whilst ensuring compliance through a full audit trail and comprehensive approval workflows.
e-bate is your single source of all rebate information, providing you with the insights you need to make proactive decisions that drive business value.