When was the last time you either changed, or considered changing, your pricing structure?
Pricing is the cornerstone of your monetary strategy and readjusting your pricing structure can enhance your business and result in a higher collection of revenue and ultimately greater profitability. Of course, no one knows your business better than you and while running your Workshop on your gut-feeling is not uncommon, there comes a point when you need to crunch the numbers and make sure they do align with that gut-feeling of yours.
Here’s where you should be looking in your COSTAR system when restructuring your pricing strategy.
The Sales Analysis window dynamically displays your COSTAR sales data, providing you with a comprehensive analysis of Order Entry sales documents. In addition to reviewing the progress of Daily, Weekly, Monthly or Annual Sales, this data can be used to review your top-selling items in a period by Quantity, Gross Margin $ or Gross Margin %.
Pricing Structure Setup
This may be the most important part of COSTAR for the smooth and profitable operation of your Automotive business. Having a well-considered price structure setup in COSTAR means that your pricing is kept up-to-date and automatically applied to any new inventory items and catalogues. This means that you don’t need to have a specialist at the front counter making sure that the right prices are calculated every time for each customer.
Further to this, you can set up this window so your key brands are shown in the breakdown as separate sales from other items/brands allowing you to quickly see your mix-of-business. This helps to demonstrate that even though you may be selling the most of one brand of tyres, you’re not necessarily making the most profit from these sales. Filtering your Sales Analysis screen to the brands of tyres that are bringing you the highest Gross Margin percentage (%) will give you a more accurate representation of your earnings on that particular product.
Accordingly, your sales focus should be switched to this brand of tyre as well as potentially marginally increasing the price of the tyre. If you’re selling let’s say 1000 of that tyre per year, by increasing the price by an extra .50c, you’re earning an additional $500 a year. With this incremental price adjustment, it won’t cause a dramatic change to the customer’s wallet when they receive their quote, however, it ensures optimal revenue for your business.
Estimated Expenses in COSTAR
Finally, an Estimated Expense (the cost of opening the doors for business) can be entered in COSTAR and will proportionally be added to the Daily, Weekly, Monthly or Annual Sales Analysis tabs. This will give you and your team a clear visual target to make in each period. If you missed our article on Estimated Expenses and want to know more, you can catch up here.
Breaking down this data in your Sales Analysis screen is a moderately easy task and as a result, can earn you higher revenue. There are several different mechanisms to set and manage these pricing structures and at least one will suit your pricing strategy.
If you need assistance understanding or implementing this, please contact our Support Team to arrange a time to work through this.