This article posted on Epicor Software’s blog for wholesale distributors includes a valuable conversation about risk management. The author observes that:
There are two types of risk:
- Good risks are called opportunities
- Bad risks are called threats
Full Article: Analyzing Your Risks for Business Success
The article goes on from there to explain how to create a risk management process. When we begin any price optimization project with a new client, we hear a lot of fear. That fear is generated from the reasonable perception of risk: If I raise prices won’t I lose clients?
Instead, we work with clients to generate a custom pricing system that evaluates every customer-item combination to take advantage of incidental purchases. Customer-item combinations that are price sensitive are protected. Those that aren’t sensitive can generate sustainable margin increase for your business.
See Also: Play Defense First
In a nutshell: Profit2’s methodology takes the “threat” out of your profit “opportunity” in your pricing strategy.