When it comes to maximizing a company's profitability, there are few more powerful levers than pricing. Finding the optimal price for a product—whether that's more or less than has been charged previously—can mean increased sales, more devoted customers and bigger profits.
And naturally, NetSuite provides a lot of data that companies can use to optimize their pricing when pared with the right pricing tool. Freedom Paper is one such customer. The Texas-based provider of wide-format printing supplies was rich in data since deploying NetSuite’s cloud ERP(opens in new tab), with sales history and information on customer groupings constantly flowing through its dashboards(opens in new tab).
But it turned out there was even more there if it could find the right tool to extract it. Enter epaCUBE, whose pricing optimization software has enabled Freedom Paper to squeeze more out the business with what essentially boils down to fine tuning.
Representatives of both companies were at the recently concluded SuiteWorld 2016 in San Jose to share their experience during a last-day session, and they made it clear that effective pricing makes a big difference.
Small Changes Get Results
"Price is more effective at raising your profit than any other tool. A one-percent increase results in an 11-percent gain in profitability," Matthew Turner, CMO of epaCUBE, told the gathered attendees. "Conversely, lowering your prices can actually result in an increase in profits" if a product has been overpriced.
Which, Turner added, is why companies shouldn't take a formulaic, cookie-cutter approach to pricing.
"The point is to review pricing based on actual data rather than instinct," he said.
For instance, Freedom Paper can deduce that a customer it thought was small is actually potentially large because it buys similar products from rivals, it has uncovered an opportunity to build that customer relationship and increase sales through better pricing.
Similarly, if it learns that 60 percent of a customer segment is buying a certain product but 40 percent isn't, it can take more effective steps to potentially turn the non-buyers into buyers.
Ready For Results
Turner said that Freedom Paper was the first NetSuite customer in epaCUBE's customer ranks, and that the partnership was ideal because Freedom Paper CEO Duana Bullins was already taking such analytical approaches to dividing up the company's customer segments.
But the proof is in the pudding—and this case, that means a more-than-10-percent increase in profits.
"There are lots of places to find money with this application, and that's what we all want to do," said Bullins.