Blog: How to Leverage Six Sigma Methodology to Drive Continuous Margin Improvements | Strategic Pricing Associates
This is the first in a six part blog series on how manufacturers and distributors can apply Six Sigma methodology to the pricing function to generate repeatable margin gains.
A disciplined process is needed to create Pricing Excellence – SPA’s Six Sigma training drives real results focused on profitable growth.
“Measure of success at strategic pricing is not how much it increases price but how much it increases profitability.”
Thomas Nagle – Professor, University of Chicago
Current State of Pricing
- Limited negotiation skills
- Cost + pricing
- No analytical tools
- No profitability improvement plans
- Sales rep discount vs. sell
- Reactionary pricing tactics
- Inconsistent pricing structures
- No growth in GM%
- Ignores market reality
- No strategy to improve margins
Six Sigma Pricing
- Negotiating strategy and tactics
- Value-based pricing
- Automated decision making tools
- Customer Profitability improvement plans
- Sales team selling value
- Pricing strategy and leadership
- Consistent and fair pricing architecture
- 2 to 4% growth in GM%
- Pricing based customer sensitivity
- Continuous improvement focus
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