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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

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Tim Mohnke

Tim Mohnke serves as PROS Service Parts Industry Strategic Consultant. His role is to provide prospective customers in service parts organizations with solutions for the wide array of pricing challenges they face. Mohnke draws upon more than 15 years of experience for his role at PROS. The majority of his career has been spent working closely with service parts organizations. He has also served as a business strategy consultant, and with a global manufacturing company where he worked in several finance and pricing positions. He has utilized his vast array of skills to successfully re-engineer pricing processes and implement pricing projects, with a track record of triple digit ROIs for his customers. Tim earned an MBA from the University of Michigan’s Stephen M. Ross School of Business, and a B.S. from Michigan State University. He served with the U.S. Marine Corps, and his personal interests include his family, sports and stock investing.

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