Metals Processor and Distributor

Revolutionizing Pricing in Metals: A Playbook for Margin Growth

Built a dynamic model integrating market costs to optimize pricing, delivering $20M in margin improvement
Case Study

Mastering Market Volatility: How Dynamic Pricing Delivered $20M in Margin Growth

A metals processor and distributor harnesses data-driven pricing to overcome market challenges and boost profitability.

In a market defined by volatile raw material costs and fluctuating customer demand, this $1B metals processor and distributor faced significant challenges. Sales representatives had the autonomy to set prices, resulting in notable margin variation and a lack of confidence in pricing strategies. With a slow and cumbersome quoting process and outdated price books, the company struggled to maintain competitiveness. By implementing a dynamic pricing engine and aligning prices with commodity indices, they streamlined their pricing strategy, enhanced compliance, and unlocked $20M in margin improvement. This case study explores the transformative approach that turned market unpredictability into a profit-driving opportunity.

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Situation

Pricing Autonomy and Volatile Markets Create Margin Challenges

Inconsistent pricing practices and outdated tools hindered profitability in a rapidly changing market.
  • Sales reps have autonomy to determine price for each transaction regardless of recommendation in an environment where raw material costs are highly volatile
  • Volatile raw material costs driving the need to push out quotes with minimal consideration for price
  • Limited margin differentiation and prior pricing was recycled in a quickly changing market due to a lack of trust in the price book
  • Notable margin variation and a slow, cumbersome quoting process

Approach

Dynamic Pricing Engine Transforms Margin Management

Leveraging market indices and structured price floors to drive consistency and profitability.
  • Developed a pricing engine to set market price by identifying the correct margin target and utilizing commodity indices to adjust prices on a frequent basis
  • Updated the price book and built price floors with a review process
  • Provided implementation training and measurement across regions

Cost changes affect margin

Incorporating even the most volatile costs into your pricing recommendations results in smarter pricing and margin improvement.
Impact

Precision Pricing Delivers $20M Margin Growth and Improved Efficiency

Enhanced quote speed, increased win rates, and margin gains redefine success in a volatile market.

$20M
Margin Improvement
Win rates increased 100-300 basis points
Improved quote speed, boosting lines quoted by 5%

Key Takeaways

Significant variation in pricing and lack of confidence in book price, regardless of order size
Shows opportunity to build a more relevant book price as well as increase confidence and ensure compliance

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