A 1% Increase in Price has the Most Significant Increase on Profitability.

In 12 months, a $42B global manufacturing company increased average revenue by 12% on its top 100 selling parts by introducing a uniform pricing and volume discount policy, increasing profit by 6%.

A $2B media company increased Quarter over Quarter revenue for core products of 18% and the average price for core products of 13%.

FRC-The Impact of Profit Levers-V2

Repeated research shows that the most efficient way to increase profit is by an improvement in price. Research from Wharton, AMR, and all of the big consultancies has proven time and time again that of the 4 levers to increase profit (increased volume, decreased variable or fixed costs and increased price), a 1% increase in price has the most significant increase on profitability.

Using data science and AI (Artificial Intelligence) to automate pricing and discount policies frees up time of sales people, pricing and contract analysts, and finance people and enables Requests for Quote (RFQs) to be answered faster, all of which increase efficiency and profit.

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Who This Is For

  • If increasing profit is what keeps you awake at night.
  • If you are tired of ‘cost cutting’ and feeling pressure to always reduce prices.
  • If your materials cost are increasing at a rate faster than revenue is growing.
  • If the economy and market keep getting more complicated and you feel like you are bringing a knife to a gun fight every day.
  • If you are frustrated that you have spent a ton of money on a CRM, CPQ, ERP or BI platform and still can’t easily get data you need to make hard sales decisions.
  • If you no longer want your sales people over relying on discounting to win business and using their ‘gut’ to make decisions with no data to back it up.

Who This Is NOT For

  • If you have an inherent distrust for sales teams and see them as enemies of the firm.
  • If you don’t believe that knowledge is power, and data driven decisions deliver improved results.
  • If you think cutting costs alone will grow your company.
  • If you are waiting to invest in technology to digitize your end-to-end customer experience.
  • If you prefer to keep doing business as usual and relying on tension between product business teams and sales teams to manage profit.
  • If you have not invested in an ERP or cost accounting system to provide visibility to cost to enable the management and optimization of profit.

You can increase profit and revenue despite increasing costs and competitive pressure in your market by transforming pricing into a competitive advantage.

Furious is focused on solving this problem for B2B manufacturers.

Background

Ashley

Ashley J. Swartz

CEO & Founder

I witnessed the power of pricing to optimize revenue and profit during my first job out of university building a corporate pricing group at a global manufacturer with more than $42B in annual revenue. By developing and implementing a uniform pricing and discount policy for our top 100 selling parts, and monitoring price adherence to policy, we were able to increase revenue on these parts by 12% and profit by 6% in 12 months.

I am Ashley J. Swartz. I started my career in manufacturing finance after getting a BS in Finance at at the world’s largest manufacturer of Electronic Components, AMP Incorporated (now Tyco Electronics). I was an analyst, responsible for revenue forecasting and ultimately building a corporate pricing practice after having discovered immense pricing variability and price erosion in our top 100 highest volume, most competitive commodity products.

Competition in our industry was increasing because of new entrants and globalization. Our standard pricing was simply a markup over cost, published once annually. Prices didn’t account for any external factors and were not updated regularly for competition, perceived customer value, changes in cost, end of life, currency exchange, etc.. When we began analyzing historical sales data, we found that actual prices were all over the place and varied greatly from a part’s catalog price. And, variability was greatest for our high volume, commodity products, which meant our highest revenue products were also our biggest sources of revenue leakage.

The cloud didn’t exist yet, so we used our intranet site to distribute pricing guidelines and discount policies to sales teams, unique to each region. We updated pricing quarterly, or 4x a year vs. once a year.

When we started to see the economic impact of our pricing policies, I was asked to join the implementation team of our ERP system, which was SAP, to ensure we configured it so as to accommodate and govern pricing for strategic parts within the contract creation workflow.

The problem was that our ERP system didn’t have tools to calculate optimal and update optimal prices using our sales data or to monitor actual prices vs recommended optimal prices . And, we realized our sales teams were still driving blindly because they had no easy way to get pricing quickly, request changes to price or visibility into the factors that impacted price to provide context with which to more successfully negotiate. When moving out of manufacturing into other sectors like advertising, media and software, although I was selling and making vastly different products, the recurring problems were the same. There was increasing complexity, meaning selling more things, to more customers, in more ways and more places, and our customers were using data and technology to drive down prices. And as a seller, pricing was a set it and forget it process, that ultimately ended up being controlled by and determined by the sales organization, who was told to just grow revenue and not be trusted with minding profit. 

The cloud didn’t exist yet, so we used our intranet site to distribute pricing guidelines and discount policies to sales teams, unique to each region. We updated pricing quarterly, or 4x a year vs. once a year. When we started to see the economic impact of our pricing policies, I was asked to join the implementation team of our ERP system, which was SAP, to ensure we configured it so as to accommodate and govern pricing for strategic parts within the contract creation workflow. The problem was that our ERP system didn’t have tools to calculate optimal and update optimal prices using our sales data or to monitor actual prices vs recommended optimal prices . And, we realized our sales teams were still driving blindly because they had no easy way to get pricing quickly, request changes to price or visibility into the factors that impacted price to provide context with which to more successfully negotiate. When moving out of manufacturing into other sectors like advertising, media and software, although I was selling and making vastly different products, the recurring problems were the same. There was increasing complexity, meaning selling more things, to more customers, in more ways and more places, and our customers were using data and technology to drive down prices. And as a seller, pricing was a set it and forget it process, that ultimately ended up being controlled by and determined by the sales organization, who was told to just grow revenue and not be trusted with minding profit. 

The definition of insanity is doing the same thing over and over again and expecting a different result.” - Albert Einstein

It was after this realization I founded Furious and decided to tackle the problem of helping media and B2B manufacturers leverage data to empower sales and transform pricing into a competitive advantage.

The valuable lesson learned, time and time again was that the hardest part of change is winning and aligning the hearts and minds of stakeholders across an organization. This is required to make any change successful and sustainable. This has been the greatest struggle I have experienced myself and with which I have watched our clients struggle in transforming price into a strategic competence and advantage of a company.

Although technological disruption continues to impact every aspect of the B2B manufacturing supply chain, resulting in continuously more efficient production and distribution, how we sell has not really changed that much. All we have done is map and automate the activities of selling, we haven’t actually changed the way we establish value of products and services with customers and come to agreement to do business. It doesn’t matter how well your supply chain is managed if price is the only lever that your sales team pulls on to compete. And we cannot expect pricing execution that is more strategic if sales teams are not provided with intelligence and context to establish greater perceived value and affect a customer’s willingness to pay. Without empowerment of and collaboration with sales teams by the business, the same outcome will always occur; price discounts or matching as a means of winning business, price erosion on your highest demand products, trouble maintaining profit margins and competitors that meet you where you are and go head to head on price time and time again.

Sounds insane, doesn’t it?

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