- Parcel and postal networks
- Road hauliers
- Freight forwarders
- Cargo airlines
- Shipping lines
- Freight railways
- Contract logistics
To match these expectations, logistics groups must define new services, develop their network and build partnerships.
To fund these investments, they must achieve profitable growth by keeping costs under tight control but also by:
- Ensuring that no service is sold below its cost
- Better understanding customers’ willingness to pay, and optimizing prices to capture the full market value of their services
High-performance logistics groups are also the most advanced in price optimization.
Complex network economics
Multiple factors influence the cost of a logistics service: origin and destination, weight, density and type of shipment, pickup and delivery density, etc. Additionally, all these factors vary by day and time.
Most advanced operators have developed low granularity cost models (from zip code to zip code or by day of the week for example) that take into consideration capacity utilization and are periodically updated.
New pricing methodology
Traditionally, logistics operators use a “cost plus” pricing methodology. This approach guarantees that every deal is profitable, but does not help to decide which mark-up to apply. Furthermore, “cost plus” pricing usually leads to:
- Value left on the table if the quoted price is lower than customer willingness to pay (WTP)
- Low conversion if the quoted price is too high
WTP can now be predicted for each deal based on transaction data analysis. It complements the “cost plus” approach in order to maximize both value and conversion.
Price management and optimization tools
An analysis of the price of transactions always reveals disparities that cannot be explained by tangible factors. They are usually due to:
- Inaccurate rate cards and quotations
- Uncontrolled discounting by sales people
- Lack or inefficiency of contract monitoring
To stop the consequent profit leakage, logistics groups must implement price management and optimization tools.
Open Pricer Solutions
- Consulting services starting at 15,000 €
- Pricing Technology starting at 1,500 € per month, with a set-up cost of 9,500 €
(for a simple configuration and managed revenue of 25 M€)
Taking the right path
Price optimization is a transformation journey. So it is important to have a clear view of your current situation and of your final goal, as well as to plan all necessary steps to make progress. Our Pricing Power Assessment service will enable you to take the right path and quickly improve your capabilities and results.
Reaping quick wins
It is possible to reap the first rewards during the first steps of the journey. Our Customer Price Diagnostic & Rerating service enables you to rerate contracts that are not achieving their expected results and have prices below the market price.
Cloud based pricing platform
Leading international groups are using our pricing platform. Unlike other pricing software, it can easily manage complex cost models, rate cards and shipment profiles. You can choose the modules corresponding to your needs:
- Smart Quote
- Business Monitoring & Rerating
- Price Analytics & Optimization
These modules can be quickly configured to meet your requirements in a couple of days.