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Potential margin improvement through
optimization of service parts pricing.
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OVERCOMING COMPLICATIONS
Benefiting from this opportunity is not straightforward. In a typical retail
pricing environment, the price and demand signals are clear and easy to
measure because the retail price of a product and for all competitive options is
public. Also, sales of a single product are typically quite high and forecast-
able, so shifts in demand are easy to measure with statistical significance.
The same is not true for service parts. Vehicle manufactures frequently
encounter several complications in determining the optimal pricing approach.
These include:
Do you have
the right commercial Relationships/Terms?
Sourcing
Optimization
Are your
Designs too expensive?
Design
Optimization
Service
Parts
Profitability
Do you have
Unnecessary Downstream Costs getting
parts to dealers/customers?
Downstream
Value Chain
Optimization
Upstream
Value Chain
Optimization
Price
Optimization
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