Application to optimise multi-channel prices
This application is designed to assist companies in determining the optimal price of sale to the first buyer, considering the individual aspects and specific margins of each distribution channel. It likewise ensures that the Recommended Retail Price (RRP) remains consistent across all channels, which is essential in order to maintain both pricing strategy integrity and perception of product value on the part of the end consumer. RRP consistency helps to avoid discrepancies which could undermine the brand image and give rise to confusion among consumers, thereby strengthening trust in the product and transparency in the pricing policy.
- Initial data entry
- Production costs: Detailed entry of costs associated with production of the product, including fixed and variable, direct and indirect costs.
- Proposed RRP (with VAT): The price at which the company wants the product to reach the end consumer.
- Distribution via sales channels: Selection and weighting of expected sales channels.
- Estimation of sales and discounts: Forecast future sales and potentially applicable discounts.
- Calculation of commercial margins
- Determination of the price for the first buyer: Calculation of the price of sale to the first intermediary, adjusted to maintain the desired RRP following application of the corresponding margins of intermediaries and distributors within the channel used
- Optimisation of pricing strategy
- Scenario simulation: Evaluation of different distribution scenarios and their impacts on profitability, including fluctuations in the production costs, variations in market demand and changes in intermediary margins. This gives companies a vision of how different factors affect their profitability, so they can adjust their strategy accordingly.
- Price and margin adjustments: Tools to adjust prices and margins so as to maximise profits and competitiveness.
-Benefits for the Company
- Price consistency: Maintains a uniform RRP across all channels, avoiding confusions and price conflicts in the marketplace.
- Optimised profitability: Helps identify the optimal sale price to maximise the profit margin in each channel.
- Informed decisions: Provides a clear view of how the different margins and channels affect general profitability.
- Strategic flexibility: Allows rapid adjustments to the pricing strategy in response to changes in the market or the cost structure.
The application calculates the prices to be applied to the first operator according to the channel used, considering the different intermediaries or operators involved, each of which applies different average margins. This serves to reflect the specific variations which exist at each level of the supply chain. This ensures that despite the cumulative margins, the final RRP charged to the consumer remains consistent and in line with the company's pricing strategy.
For example, if the company opts for direct sales, the sale price will be equivalent to the desired RRP. If intermediaries are used, selling to major distributors, the application will calculate the right price for sales to the first operator, bearing in mind the standard margins applied by each participant in the supply chain. This thus ensures that the final RRP charged to the consumer remains the same, and is in line with the established pricing policy.
This proves particularly useful in market situations requiring swift adaptation, such as at times of fluctuating demand or changes in production costs. The tool serves to optimise profitability without sacrificing price consistency, and so provides stability and trust for both the company and consumers.