There are three fundamental strategies:

Focus on Price Image

Here, only the spare parts that are offered at too high price are adjusted. The goal is to ensure that customers no longer perceive the company as expensive.

The optimization of the price image through price intelligence strategies maximizes customer satisfaction by enabling price guarantees and opening up new market share potential. Increased cross-buying willingness can also generate additional revenue, for example, with service offerings, modifications, upgrades, or new machines.

Focus on fair prices

In this strategy, all sales prices are consistently adjusted to match the market. The goal is for customers to source all parts directly from the machine manufacturer, as they always offer a fair, market-based price.

This is often referred to as a compromise between optimizing sales, margin and customer satisfaction. Increased customer satisfaction and loyalty also results in a greater willingness to cross-sell and up-sell other services, conversions, upgrades and new machines.

Focus on sales

This strategy focuses on short-term revenue and margin increases by exploiting price and monopoly potentials.

In summary, these are measures for sustainably securing revenue increases. It is important to continuously monitor the development of customer satisfaction and act accordingly.

Read more about how can you identify trends to master your dynamic pricing strategy for an inmediate success

There are essentially three options:

• Increase prices for underpriced spare parts (price increase potential)
• Raise prices for spare parts with little competition (potential for exclusivity)
• Improve price image to enhance customer loyalty and thus the opportunity for cross-selling and up-selling (market share potential)

The decision as to which pricing model is suitable for a machine manufacturer depends on various factors, including

• Volume, structure and history of the spare parts portfolio,
• pricing strategy including profit margin, share of spare parts in total sales and defined sales increase within a certain period of time

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Attractive prices are particularly important for prominent spare parts. For example, a price reduction is a good idea for parts that are offered three times more often than they are sold. In this case, it is important to monitor the hit rate. In the next step, low-performance customers should be identified and actively approached. Certain parts can also be actively advertised with the price adjustment and at the same time the cross-buying readiness can be used for other products.

Note: Spare parts price reductions must be communicated cleverly to customers, employees and management. Marketing plays an important role here (definition and implementation of various campaigns).

Would you like to learn about the role of price reductions and their benefits for increasing sales using concrete examples?

Please also read The Ultimate Guide to Market-Based Parts Pricing

To help create informed decisions, PRICERADAR provides a clustered overview for concrete adjustments to your current prices and your pricing strategy.

Combine PRICEGUIDE and PRICERADAR to streamline pricing with automated recommendations based on market data.

Learn more how PRICEGUIDE revolutionizes parts pricing for machine manufacturers here.