Here is a perplexing contradiction in the heavy-duty parts and service business. On the one hand, it’s fair to say that every member of the heavy-duty supply chain would like to maximize their margins, improve their profit performance and ultimately, increase the firm’s value.
On the other hand, relatively few distributors or suppliers are focusing their attentions on the single, most powerful means to achieve all these objectives and more: pricing.
What’s preventing both successful and marginal players from leveraging the power of pricing to improve their performance? What often separates those who succeed from those who struggle is a series of industry-wide myths about pricing:
“The Market Controls the Price”
Everyone learns this within their first month in the heavy-duty market. Yet this particular myth has done more damage and cratered more markets than all of the rest of myths combined.
When executives and managers buy into this myth, they are essentially abdicating their responsibility to make sound choices for their company. Their margins are virtually guaranteed to suffer as a result.
The reality is that the “market price” for any product, no matter how commoditized it may seem, is never just one price — it’s always a range. In truck parts and service, the range is highly dependent on a number of different factors and can, in fact, be fairly wide. Within the range there can be dozens, or even hundreds, of valid price-points to choose from.
