Business Impact

Improvements in pricing have a much more dramatic impact on profits than any similarly proportioned reduction in cost. In the example below, you’ll see how a 1% improvement in pricing results in a 12.5% improvement in operating income.

Financial Benefits:Higher Price and Margin Realization flow straight to earnings

Assume 1% improvement in pricing +1.0%
(assume that company has Gross margin of 60% and operating Income of 8%)
($ Millions) Base P&L Pro Forma
Impact
$ %
Total Revenue $1,600.0 $1,616.0 $16.0 +1.0%
Gross Profit $960.0 $976.0
as % of Net Sales 60.0% 60.4%
Operating Income $128.0 $144.0 $16.0 +12.5%
as % of Net Sales 8.0% 8.9%

Process & Operational Productivity

Consolidated data, automation, analytics and collaborative planning enables

  • Rapid adoption of best practices
  • Quick review of issues
  • Decrease in missed opportunities
  • Less time spent on administrative tasks
  • Reduced errors

Customer Experience

  • Ease of doing business
  • Faster deal response time
  • Rational pricing
  • Consistent brand image