WEAK CORRELATION BETWEEN VOLUME & PRICE

Your pricing for low volume sales may be too low …

The graph below illustrates the relationship between price and annual item volume for one item. Each blue and red dot represents one customer buying the item in the course of the year. You’ll notice the blue dots clustered around the diagonal line. The blue dots are customers buying the item where there is a strong correlation between how much the customer buys and how much they pay. Pricing for these customers is what you’d expect … the more they buy, the less they pay and vice versa.

Then there are the “red dot” customers …

These “Red Dot” customers buy the item once or occasionally. Sometimes pricing for these customers is at higher margin rates (upper right hand corner of graph). However, much of the time, this item is sold to low volume buyers at lower than necessary margins (upper left hand corner).

Profit2’s patented analytical tools analyze the hundreds of thousands of customer/item combinations you sell, identifies those combinations where you have an opportunity to safely increase margin and provides specific recommendations for each opportunity item.