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A Clear Path to Stronger Margins

March 30, 2020

By Jim Holland, Senior Product Marketing Manager

With the current economic climate, hightech companies should be looking for ways to maximize revenue and avoid leaving any hard-earned money on the table. One key step high-tech and semiconductor companies can take is to manage their gross-to-net in real time.  

Historically, most organizations are able to analyze what has happened to their price waterfall in the past, but they are unable to set, analyze, and optimize their pricing on-the-flyUnfortunately, this lack of immediate action can lead to leakage at different price levels along the price waterfall – from list price to pocket margin.   

To achieve maximum growth and increased profitability, companies must be able to understand the true price of their products and net revenue. And that requires visibility into all aspects of a transaction – from pricing, to discounts, to contract performance and compliance. Simply put, you need:  


(n) Total transparency from your list to net price 

With price-parency, you can prevent price erosion and eliminate pricing concessions that don’t meet contracted volume commitments.  

Does this sound familiar? 

With the complexity of your product catalogs, sales channels, and incentive programs, managing revenue execution moments accurately and quickly is an arduous task. Let’s just consider one element: incentive programs.  

Contract discounts, sales discounts, rebates and market development funds. These are just a handful of the incentives you’re offering to accelerate sales and build loyalty with your customers and channel partners. The high percentage of these special pricing agreements means that no matter how much you optimize upfront pricing, you’re likely still seeing revenue leakage.  

Why? Because you lack a single system of record that provides a clear view into revenue performance, channel sales, contract commitments, and inventory data. And without that level of visibility, mistakes happen.  

Here’s an example. A channel partner asks you for a 10% discount. But that partner is also entitled to a 3% rebate. If you didn’t have access to all incentive and discounting information because you rely on siloed processes and systems, you would likely have given that partner the 10% discount on top of the existing 3% rebate – so the partner ends up with a 13% total discount and you lose 3%.  

Or take that volume-based discount you offered to another customer. They were expected to purchase a certain amount of product each month, and you’ve extended them a sizable discount in return. However, without an accurate and timely view into their sales record, you wouldn’t be able to see that they haven’t met their contracted volume commitments, yet you’re still giving them the lower price 

Manage your entire gross-to-net process in real time, proactively 

When you are trying to manage gross-to-net with siloed CRM, CPQ, point solutions, and homegrown solutions, you will experience breakdowns in your price waterfall – and these breakdowns could equate to as much as 9% revenue leakage:  

  • 3-5% from the contracting and sales discounting phase 
  • 2% through SPA/ship-and-debit and price protection phase 
  • 2% through rebate incentives and MDF programs 

A single system of record that provides fast and complete visibility into every phase of the revenue lifecycle is your protection against price erosion. If you’re ready to introduce price-parency into your revenue management processes, schedule a free revenue assessment today. 


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