Blog: Analytics Can Improve Pricing & Profit – If You Analyze the Right Things | Strategic Pricing Solutions
Over the years we have had clients tell us their pricing analytics were strong and did not need help. They thought they could use more help in setting pricing strategies to protect against declines in Average Selling Price (ASP), which was one of their metrics. Our first reaction is always to look at the analytical work the client is doing and how they turn it into insight. What we often find is that the client is measuring something relatively broad that does not lead to any real insight. The goal for all of the clients ultimately becomes analyzing the right things that can enhance their decision making.
One client showed us charts measuring the monthly ASP for some of their high-volume product categories. There were increases and dips along the way, but it was a generally upward sloping trend line. The client thought they were doing a good job of increasing prices. We worked with the client to drill down deeper to each customer and product, and we found they were not increasing prices at all. In fact, they were decreasing prices to smaller customers, but they had a greater mix of small customers and higher-priced products within a given category. So the mix of customers and products caused their measured ASP to increase. When the client saw the results, the client’s reaction was “That’s good, right? By lowering prices on the smaller accounts, we sold more products.”
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