06 October, 2016
By Vinod Muppala, Senior Research Analyst, Software and IT Services at Beroe, Inc.
Organizations like 3M, P&G, Unilever, and Johnson and Johnson sell thousands of products in more than 200 countries where they have to consider competitors pricing, discounts, trade agreements, annual contracts, tenders, rebates and special discounts. Taking all this into account, companies are still able to do an extremely good job with respect to pricing.
Organizations maintain global repositories of price and life cycles of pricing starts from adding a pocket margin to Cost of Goods Sold (COGS) which is called pocket price. Then they include value-added service, bonus and rebate to approach invoice price. They also consider discounts and charges like customer discounts, freight, packaging and handling and special deals to arrive at list price. They arrive at base price based on geography, market competition and customer.
Based on our experience, we have seen clients that face challenges with their existing pricing systems. These are:
Pricing systems offered by vendors are industry-specific solutions, and we observe opportunity in the pharmaceutical, life sciences and biotechnology industries.