Pricing strategies can differ greatly, depending on the type of product and market. The chosen pricing strategy impacts directly on cost and financial performance. At a minimum, it should meet the financial targets of the company, in terms of profit, ROIC and other financial metrics. At the same time, the pricing should be competitive for the marketplace. Balancing these requirements requires a careful analysis at an appropriate level of detail.
Key Questions
- What sales price(s) will ensure that the supply chain will meet the financial targets of the company, while remaining competitive in the target market(s)?
- Which profit margin gives a sufficient return on invested capital?
- What credit period should be granted to the customers?
- What credit period is acceptable for the suppliers?
Product Pricing Strategy and SimFlex
SimFlex can simultaneously consider cost drivers, cash flows and multiple asset types to provide key performance metrics to support any pricing strategy decisions. SimFlex offers quick what-if analyses on the key parameters of the pricing strategy, including sales price, cost trends, inventory turns and credit periods and can also be used for regular pricing reviews separate from, or in collaboration with customers.