Imagine this – when planning your trade promotion pricing, including rebates, free goods, break based discounts etc. you can see your dead net price before it goes live. You will never accidentally price below margin levels or below cost again.
Here are three easy ways you can avoid a negative profit trade promotion...
1. Get visibility of your pricing and margin before the promotion goes live
With trade promotion visibility you can ensure that the list price and net price will work together harmoniously. You can utilise software to access the performance of a promotion, after all the discounts and free goods are accounted for. Ensuring that you won’t end up being out of pocket and maintain your margin targets. Many attempt to do this in excel and for some it works for a period of time but quickly becomes unreliable and cannot deal with the promotion and pricing complexity that exists across many verticals. Getting pricing accurate sometimes means the difference between profit and loss in tight margin industries.
2. Empower your Sales team to be masters of the upsell
Your Sales team shouldn't have to spend time calculating the cost of a trade agreement to your business when they should be spending that time selling. When a customer requests a product, your team should be able to instantly see what opportunities are available to cross sell or upsell. Promotions such as break based discounts should be visible to the salesperson at the time of the sale, helping to make up-selling a breeze and happier customers as a result.
3. Clearly understand your true cost price – inclusive of discounts, promotions and rebates
Having the decision making power in your hands means when you are accessing a client’s offer to purchase you can see what the true profit margin is to you in real time. The true profit result incorporates all price and promotion components of the deal – knowing when to pass or accept the deal is your competitive advantage. For example, this is a huge competitive advantage for a distributor who, according to Forbes, have only a 1.8% net profit margin.