Marius Toma, Senior Business Development Analyst / Account Analyst Manager for WiseTech Global, explains that competitive pricing and increasing profits don’t have to be mutually exclusive.

It's obvious why everyone talks about staying competitive on price. On one hand, always assume customers want everything cheaper and strive to satisfy them, while on the other, focus on your need to grow your business. At first glance it looks like a big dilemma. Does this always mean reducing price? Of course not. In theory, a price is set by the market, but in the real world, the price (or I should say the perceived price) is affected by many other variables.     

I often hear: "I have to cut my price due to tough competition.” Competitive businesses that sell similar products or offer similar services do use competitive pricing. But if there is a differentiator between them - perhaps in quality, sophistication, or simply said value – then the pricing pressure eases. In an industry where everyone wants to commoditize everything, what impact would offering choices and selling extra value to your customers have? We think customers want only cheap services, but is that always true? Some customers will pay more than market price if value warrants it, but the market doesn’t determine your value. Customers do. It falls to you to prove it to them. 

Segmenting your offer so customers are able to select from the price-to-value spectrum is another way to reduce price. This keeps customers happy by allowing them to select what is important to them and keeps your business healthy. These days, you can use technology to segment your service offerings while still simplifying the process and avoiding new workload burdens for your operations. Collaborate with your customers and integrate your systems to meet their needs. If you increase their data quality and access speed then you simultaneously increase yours. Essentially, enhancing their business enhances yours. Produce exactly what they ask for: customized, quick, and quality services. Today’s advanced, affordable technology solutions can not only cut your operations costs but also offer functionality to deliver all these additional services without breaking internal processes and confusing staff with thousands of internal, manual tasks. Provide real-time visibility of every movement in the supply chain as well as detailed analysis like landed costing to the cent. Documents, emails and EDI messages flow automatically to the right recipient at the right time. More services and efficiency leads to more value, and more value means more pricing flexibility. 

If you must cut prices, don’t do that to the detriment of quality by cutting staff, for example. Avoid losing the quality of your services, by altering processes instead. For example, technology automation can easily increase productivity of current staff, by 35 percent, and it lets you focus on growing your business with the new available capacity. Workflow automation tools allow staff to concentrate on customer service and new business development rather than on manual, repetitive tasks. These tools help you cope with unforeseen work volumes and load surges, reduce per-job operational costs, increase your profit margins, keep your service providers and agents up to date, and enhance the customer experience. All of these result in the enhanced value of your business.  

Logistics businesses sometimes attempt to excuse their lack of action. “We’re not big enough.” “We don't have multiple offices.” “We don’t have the buying power with carriers to stay competitive on price.” Do you have the visibility to see if all your shipments are moving efficiently through your company? Surprisingly, some shipments do not utilize company-owned channels. Dealing with multiple, costly application issues (covering purchase order management, customs, forwarding, warehousing, trucking or other supply chain segments) can muddle departmental communication and put pressure on pricing.

Clean the cluttered house. By consolidating everything under a single, centralized technology solution – across multiple offices or departments, countries, and regions – you gain visibility and control. You create buying power and stronger customer synergy. You construct a more collaborative approach. Through shared data, you build a gateway effect, even if you do not run an actual gateway operation. The right solution will offer compliance functionality without the need to integrate multiple software applications or hire an army of experts to deal with customs, accounting, or local requirements in your worldwide offices. If you rely on a network of agents, make them part of your family. An integrated technology platform will cement relationships as well as provide faster data processing and reporting. In the end, your customers win. Less cost for you means more value for them. If you did need to cut that price, you did not cut your actual profit. You might have actually increased your profit margin. 

In your relationship with service providers, use a workflow process tool like exception reporting to monitor supplier quality and activity volumes (critical information for negotiating with suppliers). Seen from another perspective, integrating service providers’ systems with yours brings an end to manually processing information and job-tracking, which ultimately leads to cutting operational costs and time. Additionally, modern cloud solutions eliminate a lot of the headaches of support software and underlying infrastructure while remaining current and reliable. Perhaps the vital question that must always be asked of such software providers: do they support their technology with the expertise to help you grow your business, increase your productivity and profit margins, and stay price-competitive? Do they reward you for being more efficient or penalize you for that? 

We can all agree now: being price competitive is more complex than simply reducing price. It's a dynamic world, so smart businesses need to work on multiple fronts at the same time: seeking dynamic partners, dynamic solutions, and dynamic pricing strategies.

Marius Toma is Senior Business Development Analyst/Account Analyst Manager for WiseTech Global

Media Contact: Lisa Tree,