> Zilliant > How Do You Determine the Truly Optimal Price for Build-to-Order or Configured Products?

How Do You Determine the Truly Optimal Price for Build-to-Order or Configured Products?

White Paper Published By: Zilliant
Published:  Apr 08, 2010
Type:  White Paper
Length:  3 pages

How do you figure out how to price a product you've never sold before and may never sell again? This is a common pricing problem faced by many manufacturers of finished goods and OEM parts, in verticals as diverse as commercial lighting, power distribution equipment, packaging automation, and industrial coatings. For many of these companies, their offerings are anything but "standard" and are built or configured to satisfy a customer's unique engineering specifications. Given all of the variables involved, the configured combinations that are possible can easily number in the thousands, if not millions. Of course, list prices and standard costs are rarely available for every possible configuration or specification, and there are very few --- if any --- examples of prior sales of the exact same configuration to a similar customer to provide any sort of intelligence or guidance about market price levels. And while normalization is a great step in the right direction, it's not without its problems. So what should a provider of build-to-order or configured products do to determine the optimal price? This paper exposes how one manufacturer overcame the challenges and generated over $40m in incremental margin-dollars in the first year by employing a powerful combination of normalization, scientific segmentation, and software technology.

Tags : 
zilliant, manufacturing, pricing configured products, normalization, scientific segmentation, software technology, list prices

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