© 2009 Evergreen Consulting, LLC All RIghts Reserved Strategic Pricing for Distributors™ 1 Strategic Pricing for Distributors TM MDM Webcast sponsored.

© 2009 Evergreen Consulting, LLC All RIghts Reserved Strategic Pricing for Distributors™

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Strategic Pricing for DistributorsTM

MDM Webcast sponsored by InforOctober 29, 2009

Presented by Brent Grover & Ken Brown Evergreen Consulting, LLC


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Mining transaction data base

Customer Size

GT

M%

GT

M%

Customer Size

Desired orderly pattern Typical random pattern

© 2009 Evergreen Consulting, LLC All RIghts Reserved Sacred Cows of Distribution™

Premiums

Discounts

Average Margin

Premium/Discount Matrix

Margin %

Customer Size

Segment, Size, Sensitivity

DistributorPricing Structure

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STANDARD MARGINEXAMPLE – VARIOUS SEGMENTS

average margin % for a sample sku

CUSTOMER SEGMENTS

STANDARD MARGIN

MRO 16.1%

OEM 18.4%

CONTRACTORS 24.2%

REDISTRIBUTORS 19.7%

INTEGRATORS 26.1%

©2009 Evergreen Consulting, LLC

STRATEGIC PRICING MATRIX

example – CONTRACTORS segmentmargins for a sample sku

VERY SMALL SMALL MEDIUM LARGEEXTRA LARGE

VERY HIGH 24% 21% 18% 15% 12%

HIGH 25% 22% 19% 16% 13%

MEDIUM 31% 28% 25% 22% 19%

LOW 33% 29% 26% 23% 20%

©2009 Evergreen Consulting, LLC

PREMIUM / DISCOUNT MATRIXpremiums & discounts from standard margin

FOR CONTRACTORS SEGMENT

VERY SMALL SMALL MEDIUM LARGEEXTRA LARGE

VERY HIGH +7% +3% 0 -7% -10%

HIGH +9% +5% +3% -5% -7%

MEDIUM +14% +9% +7% 0 -3%

LOW +16% +11% +10% +3% 0

11© 2009 Evergreen Consulting, LLC All RIghts Reserved Strategic Pricing for Distributors™


FAQs

How much of a profit difference will Strategic Pricing make?

What makes Strategic Pricing work?

What does it take to get started?

How long does it take to obtain measurable results?

How much does Strategic Pricing cost?

Are the results are sustainable?


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BASE CASE

150 BPS 200 BPS

SALES$50,000,00

0$51,000,00

0$51,370,00

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COGS$37,500,00

0$37,500,00

0$37,500,00

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GM$$12,500,00

0$13,500,00

0$13,870,00

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GTM% 25.0% 26.5% 27.0%

EXPENSES$11,500,00

0$11,700,00

0$11,775,00

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PRETAX NI

$1,000,000 $1,800,000 $2,095,000

ROS% 2.0% 3.5% 4.1%

EQUITY $7,000,000 $7,000,000 $7,000,000

ROI% 14.3% 25.7% 29.9%

Profit Power of Strategic PricingProfit Power of Strategic Pricing

Frozen


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How to start

How Strategic Pricing affects the organization

What it takes to get started

What is needed to succeed

18© 2009 Evergreen Consulting, LLC All RIghts Reserved Strategic Pricing for Distributors™


Resources

Customer Profitability Analysis

Sales compensation plan design

Management & sales training


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STRATEGIC PRICING FOR DISTRIBUTOR

S

Brent R. Grover

Tools & Rules to Optimize Your Margin

Brent Grover’s NAW BookshelfBrent Grover’s NAW Bookshelf

NEW 7/09

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Boutique firm entirely focused on the W-D channel

Advisors to wholesaler-distributors, suppliers, marketing groups and trade associations

Strategy, growth through acquisition, strategic pricing, profit enhancement

Evergreen Consulting, LLC29525 Chagrin Boulevard, Suite 214

Cleveland, OH 44122

(216) 360-4600

[email protected]

mailto:[email protected]

© 2009 Evergreen Consulting, LLC All RIghts Reserved Strategic Pricing for Distributors™ 1 Strategic Pricing for Distributors TM MDM Webcast sponsored.

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