10 Reasons Why You Need to Reevaluate Your Service Parts Pricing Strategy
With aftermarket service becoming an increasingly important and strategic focus area for manufacturers around the world, why is it that so many organizations are resisting investment in solutions dedicated solely to its optimization?
Original equipment manufacturers (OEMs) that continue to rely on antiquated service parts pricing face hidden costs from capital, service, time, and resources. And what they don’t see is that these costs are adding up to more than what they’d be investing in a sophisticated pricing solution.
So, what’s the hold up? For many, it’s the reality that aftermarket service is already profitable as is – which can be a barrier to change. Therefore, many OEMs are not demanding any major changes right now. In fact, many see change as a potential detriment to the profit extraction of the aftermarket service-side business.
But the reality is, the sooner they make a change – one that they know they’re likely to make in the future – the lesser the disruption to operations will be today. If you wait until change is needed, you are setting yourself up for massive disruption later.
Why It’s Time to Change Your Service Parts Pricing Strategy:
- There will always be segmentations of price that lend themselves to either end of the service pricing maturity curve, requiring a flexible pricing
- True pricing maturity is all about balancing multiple different pricing approaches at once – but there’s no quick way to achieve intelligent pricing at scale
- The science of pricing will always exist, but the art of pricing lies in the pricers’ ability to leverage technology to streamline the process efficiently and effectively.
- Nearly 80% of manual pricing organizations’ time is spent on administrative activities, leaving only 20% of their time to actually work on creative pricing strategies.
- By blending automation with customization and rule setting, pricing technology can empower pricers to use the art of pricing to the organization’s advantage.
- The right pricing technology enables businesses to serve more customers, at greater speed, and at less cost, while turning today’s influx of data into valuable business intelligence.
- Getting early pricing technology buy-in from IT is crucial to implementation success, adoption, and change management within the
- The better implemented an intelligent pricing solution is within the entire organization, the more successful OEMs will be on their pricing
- OEMs that continue to rely on homegrown pricing solutions, or solutions that are too broadly focused on pricing as a whole, face hidden costs from capital, service, time, and
- A traditional pricing vendor may be keenly aware of pricing problems in an organization, but an aftermarket service-focused provider understands the bigger picture, like overstock challenges, delivery problems, and part availability
Achieving best-in-class pricing is about a fundamental understanding of either price increases or price decreases necessary for an organization to grow profit and market share. Ultimately, for organizations that desire the benefits of more advanced pricing methodologies, an intelligent pricing solution that automatically manages data administration is the only way to go.