How do Changing Prices, Contracts, Materials and Resources Affect Product Profitability?

Competition not only drives product innovation; it also affects day-to-day decisions on manufacturing processes, product recipes, pricing, packaging & freight, discounts & terms,and overall product portfolio mix. Managers responsible for product costing, pricing, and planning in competitive markets place unique demands on their business information systems. While traditional systems can be effective at backwards-looking performance monitoring, they present a challenge when modeling and predicting effects of changes in materials or components based on actual costs, which are often contained in siloed systems and one-off spreadsheets.

What If? Simulations Right Down to the Bill of Materials

Use pVelocity’s Profit Analyzer & Cost Simulator to access the granular insight that will help you manage product performance.

  • Find out what would happen to margins if you switched your product mix
  • Discover how best to adjust your pricing strategy to accommodate frequent cost fluctuations
  • Simulate the opportunities and risks associated with changing contract terms

Analyze Product & Market Segmentation

  • First, identify performance drivers by categorizing and segmenting products that perform alike
  • Then drill deep to analyze specific product and customer margin performance
  • Follow with simulations to model the impact of price changes on sales volume and customer profitability

Pricing Management in an Environment of Fluctuating Costs

While pVelocity can manage pricing using traditional means such as customer price compliance and analyzing margin leakages via discounts or incentives, a total price management solution is not complete without incorporating actual cost data from across the enterprise. These actual costs serve as the basis for decision-making on:

  • price/volume consistency across customers
  • management of the price-elasticity curve
  • transaction alignment to price elasticity

With pVelocity, margin and pricing decisions can be made with confidence, because its simulations move beyond standard costs to incorporate a comprehensive list of real-time costs, reflecting actual market and operational conditions.

Use pVelocity Simulations to Segment and Assess Product Portfolio and Market Opportunities

  • Reallocate your product mix to increase the margin utilization of key resources or equipment
  • React to frequently fluctuating material and utilities costs by adjusting near-term pricing strategy
  • Arrive at informed make-vs.-buy decisions on intermediate materials