Auto Parts Manufacturer Optimizes Market Pricing to Generate $5 Million in 28 Days
Like many organizations, this automotive manufacturer and distributor relied on a cost-plus pricing model focused on a corporate-mandated target margin for pricing all its automotive aftermarket parts. In many cases, however, parts pricing was reduced when customers complained that costs were too high. When price reductions were made, the prices of other parts were never adjusted to help offset the margin loss. At the same time, the manufacturer had no visibility into competitor pricing and how the market would react to specific pricing decisions. This lack of visibility into competitor pricing data led to delayed notification of changes in the market conditions and missed pricing opportunities. By not pricing correctly and reacting quickly to the competition, the manufacturer was losing tens of millions of dollars in revenue, volume, and margin.