What do you do?
We help companies address one of the most intractable pricing challenges they face, gaining 5 to 7 points more margin on “incidental sales”.
What is an incidental sale?
These are items a customer buys 1 to 3 times a year and on which which the customer spends an average of $200 a year per item.
Are incidental sales a big deal given the low volume?
Each incidental sale is smalll by combined, these sales account for 25 to 30% of most companies’ total business.
How much can you increase the margin on incidentals?
Our clients increase their margin on incidental sales by 5 to 7 points. Most of our customers start with only a 5 to 7 point margin difference between their average margin and their margin on incidentals. Through our work, we increase that differentiation to 12 to 15 points.
What’s stopping companies from just increasing the price of incidentals themselves?
The biggest barrier is fear. Sales people rightly are protective of the relationship and dread a conversation of why a price was raised. Most sales people tend to get comfortable pricing all purchases within a narrow band width around their average margin.
What are the risks?
It is essential to “sweat the details” before changing a price. We must not attract your customers’ attention. So we make sure that we identify exceptions that can create issues. For example, there are highly commoditized items purchased by a large portion of your cusotmers that can’t be considered incidental even if a customer only purchases it one time a year and spends only a few dollars.
How are you different than others in your field?
We believe margin improvement is chiefly a behavioral, not an analytic challenge. Our senior partners have worked as sales people and led companies in your industry. So we know that until a price is used by your sales person at order entry, nothing has been accomplished. Our tools and methodology are focused on gaining the active support of your sales organization.
Are you expensive?
Yes. But on average, a 1 point margin gain increases our customers’ profits by 25+%. Our clients recoup their full investment in our services within 60 days. On average our clients gain an ROI of $15 per each $1 invested in our service.