The task of achieving optimal pricing in the automotive and equipment parts industry can be quite challenging. Market-based pricing techniques—even with perfect information about competitor prices — are an attempt to get it right. But, recent research conducted by PROS for a major auto parts manufacturer shows that new automated tools and techniques are required to overcome what can be described as a “market-based pricing credibility gap.”
This gap occurs because current methods of using only competitive data to determine a “market-based” parts price aren’t really up to the task. While the logic of market-based pricing to the average has the advantage of simplicity, according to our research, it’s not the whole story and it doesn’t reflect what happens in the real world.
That means a lot of parts manufacturers and distributors are experiencing far more uncertainty in market-based pricing analysis than they might think. And, if their pricing analysis is off, it’s likely that they are not optimizing prices for profitability, and may also be wasting money on competitive pricing research.
To close the “market-based pricing credibility gap,” professionals today have to explore new methods of prescriptive pricing for parts that incorporate more comprehensive scientific methods and automation through advances in software technology.
There’s a new white paper that I’ve written aimed specially at this issue in the auto parts/equipment industry. Download it free