The power of pricing: a new insight

Every experienced Pricing Manager knows this and has seen it often in pricing trainings or seminars: pricing is THE P&L driver with the biggest impact on the bottom line. And offers much more leverage than growing volume or cutting cost. Nothing new so far.

But did you know that there is a driver that has even more impact on your bottom line than pricing? Trade Spend !

I invite you to simulate it on your own P&L. And let me know what you have found ! Probably you will find something similar like this:

       EBIT impact of 1% volume growth: +2%

       EBIT impact of 1% savings of COGS: +4%

       EBIT impact of 1% higher price: +6%

       EBIT impact of 1% reduction of discounts: +8%

That’s why Pricing Leaders must have trade spend optimization as one of their priorities. Hope it is the case for you.

For additional information on how to design and install a Performance Based Trade Terms scheme or how to get discount inflation under control, I invite you to check that section on my website. Or feel free to contact me. Most probably, I can help you.

Kind regards,

Peter

Pricing Consultant, Expert, Coach