What is special pricing collaboration? — Enable

What is special pricing collaboration?

Filed as DealTrack featuresPosted March 7, 2019

With ever-more complex trading agreements being created in an already vast and competitive market, the ability to efficiently maintain pricing flexibility between manufacturers and distributors has become essential. That is why Enable is pleased to announce a new DealTrack feature that we are calling ‘special pricing collaboration’.

For over a decade, our rebate management software has helped merchants, buying groups, wholesale distributors and retailers to drive mutually profitable growth with suppliers, whilst improving cash flow and reducing risk.

Alongside rebate agreements, manufacturers and distributors are increasingly collaborating around ‘special pricing agreements’, commonly abbreviated to SPAs, and often referred to as ‘contract support’ in the UK building materials sector. By necessity, SPAs are collaborative arrangements whereby manufacturers and distributors team up to grow sales through strategic pricing that is designed to grow competitive market share.

With SPAs gaining in popularity, and the inherently collaborative nature of these pricing mechanisms, Enable in investing in a new software product that allows manufacturers and distributors to implement and administer these deals in a seamless and automated manner.

What are SPAs?

In simple terms, a special pricing agreement is:

An agreement offered jointly between a manufacturer and a distributor to supply products to a defined market segment at a specially reduced price.

The prices offered might even be loss making for the distributor without the support from the manufacturer. A defined market segment might be a specific contractor or installer, a specific geography, or even a specific installation location or site, with the product range being discounted often restricted too.

Typically, SPAs are negotiated between a sales person in the distributor’s branch or pricing department and the manufacturer’s field sales team. Some SPAs are initiated by the manufacturer, some by the distributor, and some by the benefitting contractor or installer.

What are the benefits?

Because SPAs are highly targeted, many individual pricing agreements might operate between a manufacturer and a distributor, with new agreements being instated frequently through the year. Combined with the challenge of frequency and volume, SPA funding is calculated and ‘claimed’ retrospectively, where the usual process is for a distributor to make monthly claims on their manufacturer partners. As part of these claims, the distributor is expected to provide supporting evidence or data on the sales for which they are claiming special pricing support and the pricing quotations under which the support had been agreed.

All of this adds up to a complex management challenge, where the costs of administering the special pricing can seriously erode the margin benefit the special pricing agreement was designed to deliver in the first place.

Enable’s special pricing collaboration software will allow distributors and manufacturers to administer their joint special pricing agreements in a seamless and fully transparent manner, reducing the administrative burden, eliminating errors and discrepancies, and encouraging sensible and effective use of special pricing agreements in the marketplace.

Conclusion

Enable is excited about its new special pricing collaboration software, and the ‘game changing’ opportunity for manufacturers and distributors alike. The ability to maintain pricing flexibility in the distribution channel offers companies an incredible advantage which extends beyond increased profit margins, but also leverage customer loyalty, proactive sales activities and essential product-line control.

We will make further announcements on this during the course of 2019. Check our blog and social media regularly for more news as we announce it.

Latest

February 2019 DealTrack update

Our February DealTrack update is now available within your UAT (user acceptance testing) environment. This provides the perfect opportunity to test newly introduced features, solution improvements and performance enhancements.