According to intelligent pricing specialist, Flintfox, its recent global research among pricing professionals revealed that 80% of businesses’ profits have suffered because prices couldn’t keep pace with rising costs and changing market conditions. The results also reflected massive profit losses (an estimate of $478,000 per business) along with concerns among pricing professionals about their ability to respond to future volatility. We recently spoke with John Moss, CEO of Flintfox International, for more detail on this new data, as well as the firm’s recommendations for how distributors can respond.
ID: Your study suggests businesses are leaving nearly half a million dollars on the table due to poor management of price changes. Do you feel there is awareness in distribution that this is taking place? Is it possible the problem is worse than they acknowledge?
John Moss, CEO, Flintfox International: Our research shows that across distribution and other sectors, there is a growing awareness that ineffective price management is eroding profits, leading almost 90% of businesses to report concerns about their ability to respond to market volatility. With so many businesses now turning to tailored pricing strategies it’s clear that the industry understands that pricing is a valuable profit lever.
However, while distribution businesses may acknowledge they have untapped pricing potential, it’s likely many have not fully grasped the scale of this. At Flintfox, we know firsthand the significant impact that mastering pricing can have on a distribution business. For example, by seamlessly integrating a new ERP and legacy POS system for one of the leading wholesale distribution businesses in the US and Canada, we created a more reliable and stable pricing system capable of changing with market conditions. This translated into massive growth for the customer, which went from $0 to $1million worth of e-commerce sales in just six months, with the business now approaching $40 million in e-commerce sales.
ID: You said that the attempts to adopt more sophisticated pricing strategies have resulted in “mixed success” for businesses. Why are they struggling in this area?
JM: More and more, businesses are working to protect their margins and drive profits by introducing advanced and intricate pricing strategies that, in theory, should help them navigate ongoing market instability. However, many companies are being held back by their inability to effectively execute these pricing strategies, with 64% of businesses finding it difficult to roll out tailored pricing across different channels and 62% facing similar issues when trying to adjust prices regionally.
These challenges are often compounded by outdated tools and systems. A quarter of businesses say their pricing system isn’t fast enough and nearly half say their system cannot manage pricing and rebates effectively. As a result, 40% of businesses still rely on spreadsheets for pricing management and this method is prone to errors and cannot provide the agility needed for modern pricing demands. Without strong foundations and the right tech solutions that enable real-time pricing adjustments and omnichannel visibility, businesses cannot properly execute their pricing strategies, leaving them lagging behind the competition.
ID: What do you recommend businesses do to be more responsive?
JM: To be more responsive, businesses need to invest in technology and solutions that enable them to implement complex pricing strategies simply and accurately, with the capability to roll-out price changes at pace. The ability to quickly adapt to market changes and accurately forecast the impact of price adjustments is crucial in today’s volatile market so businesses need to prioritize intelligent pricing solutions that move beyond spreadsheets. These advanced and automated tools eliminate pricing errors, enable faster price rollouts and provide the solid and reliable foundations needed to execute any pricing strategy.
Ultimately, pricing needs to be elevated within the corporate agenda, ensuring pricing teams and professionals have the tools and resources they need to manage margins effectively. In doing so, companies can safeguard their profits and thrive in today’s market.
