The challenge of aftermarket pricing |
The challenge of aftermarket pricing
Companies providing aftermarket services and parts are nowadays facing a significant challenge to effectively maintain and optimise their pricing structures. Calculating the most appropriate pricing for aftermarket services and parts is a substantially different process from establishing prices for their core products. For starters, there's the sheer magnitude of the task. Depending on the industry, tens or even hundreds of thousands of unique stock keeping units (SKUs) must be actively managed at any given time.
Each part has its own cost structure and mean time to failure, and many are bundled with services rather than sold independently, thus increasing the complexity of the pricing process. Moreover these parts are often distributed internationally through multiple channels and echelons to numerous market segments having different price sensitivities.
Those are just the internal challenges. Companies also face considerable external pressures, including competition from third-party parts manufacturers and the fact that customer needs —and thus market demand — varies considerably throughout the parts lifecycle. However, although parts frequently make high-margin contributions to your bottom line, the business units responsible for them are typically resource-constrained. Companies often choose to spend time and effort in other areas, such as improving customer service, rather than rigorously analysing and pricing individual parts to reflect their business mix and market power.
How Deloitte's pricing professionals can help
Based on our broad experience in the field of aftermarket pricing, we can help companies in their efforts to prioritise the highest value opportunities in order to realise measurable bottom-line improvements in the near term. Moreover we assist in implementing the organisational changes necessary to sustain margin and revenue improvements over time. We bring client-tested approaches and methodologies that incorporate effective industry practices and have delivered real value — all to help achieve meaningful results.
Improving the pricing of aftermarket services and parts can help companies increase revenues, balance unpredictable downturns in sales, and become a key competitive differentiator over the long term.
