Price Execution identifies how set prices and anticipated profits can be achieved with little to no dilution. This process measures and analyzes business practices that erode margin – all the way down to transaction level. Savings are identified when there is a disconnect between the margin and the associated costs for a set of transactions. Price Execution provides managers with the ability to group transactions to study profitability by product, customer, brand, channel and more.

Our Approach

AACG has assisted numerous clients improve profitability by deploying a 3-step process.

What cannot be measured cannot be improved

The first step focuses on giving owners a very thorough understanding of how and where money is made and spent in the business. By understanding the revenues, associated costs and resulting profit for each transaction, we can aggregate information to provide many, powerful views of business activities and health. Income statements are, after all, an aggregation of line items on the invoice. To obtain this level of understanding requires ready access to clean, historical, invoice-level, line item data.

Quick and immediate opportunities to increase profits

This step focuses on analyzing the wealth of information created during the measurement step and identifying opportunities that could immediately improve the bottom line. Savings are identified when there is a uniquely low margin and/or high cost elements for a specific group of transactions. Savings identified typically equal 2% to 3% of revenue and cover the entire value chain – sales, marketing, supply chain, discounting, finance, shipping and purchasing, among others.

Implement a quick, repeatable process with company-wide buy-in

Determining optimal prices is relatively easy. Passing on these prices to customers requires enterprise-wide buy-in, especially from the field sales force. A repeatable, technology-driven solution with appropriate discounting approval processes, price floors, and timely reporting will ensure that anticipated revenue and profits make their way to the income statement without dilution.