Pricing strategies differ greatly, depending on the type of product and market. The chosen pricing strategy impacts directly on cost and financial performance. Pricing levels must meet the financial targets of the company while at the same time offering a competitive price in the marketplace. Balancing these requirements requires a careful analysis at an appropriate level of detail.
Key Questions
- What sales price(s) will ensure that the supply chain will meet the financial targets of the company, while remaining competitive in the target market(s)?
- Which profit margin gives a sufficient return on invested capital?
- With the forecasted price erosion, at what stage of the life-cycle will the break-even point be reached?
- What credit and payment period should be granted to the customers and suppliers?
Pricing Strategy and SimFlex
SimFlex simultaneously considers cost drivers, cash flows and multiple asset types to provide the key performance metrics to support any pricing strategy decisions. SimFlex offers quick what-if analyses on the key parameters of the pricing strategy, including sales price, cost trends, currency fluctuations, inventory turns and credit periods and can be used for regular pricing reviews separate from, or in collaboration with customers.