Transactional Pricing Audits
What is a transactional pricing audit?
Transactional pricing audits, also known as transactional pricing analysis, is the exact price point at which your product transacts, taking into account any offers or discounts. The price that you market your product or service may not always be the exact price that you transact with a customer and it’s that transacting price that could differ from your competitors.
Transactional pricing analysis is commonly used within the automotive industry, as the price for a vehicle can vary depending on deals and discounts offered. For example, if a car manufacturer wanted to identify how the transacting price of a particular model compared to competitor models, they would conduct a transactional pricing audit on their own model as well as 4-5 comparable competitor models, to establish the level of discount being offered and what price each vehicle actually transacts.
How do you carry out transactional pricing analysis?
Transactional pricing audits are typically conducted by auditors who have no association with the brand. Using the example of a car manufacturer, an auditor will initially visit the brand who is conducting the pricing analysis and enquire about a particular vehicle model. The auditor’s objective is to get the best deal possible and push for a discount. The auditor may follow-up with a telephone call to see if they can drive the price down even further with the objective being the best deal possible. The final price agreed between the auditor and the sales executive is the transacting price.
The auditor will then visit 4-5 competitor brands and enquire about comparable vehicle models with the same objective, to drive the price down as far as possible and get the best deal. The transacting prices are then compared by brand and provided to the instructing client.
How can you use pricing analysis within your business?
Transactional pricing analysis will identify exactly how much discount your sales team are offering and exactly what price point you are transacting against your competitors. The audits will establish if your sales team are offering too much discount, not enough, or a comparable discount to other brands. The analysis will show you at what price point each brand is transacting within each product segment and allow you to make changes where needed.
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