The concept of variant, or component, pricing is familiar among manufacturers today thanks to Dell. That’s because Dell introduced the concept of variant pricing through its model for customizing the purchase of a personal computer---a dramatic innovation at the time. When ordering a PC from Dell, for example, the customer selects a base option and then can choose to make variations on the base configuration by adding hardware and software components. By setting a new standard for how consumers purchase a PC, using variant pricing for adding components, Dell rapidly became a market leader in its industry.
Despite the success of variant pricing among manufacturers, distribution companies have rarely followed suit…and therefore have often missed opportunities to increase customer perceptions of value and capture added profits that variant pricing offers. This whitepaper describes how variant pricing can be applied to the distributor business model and explains how innovators in distribution are already using variant pricing to increase their competitive position and enhance profitability.
Serving as a Manager in PROS’ Professional Services group, Matt McClung is responsible for customer relationships and integration of customers’ pricing models with PROS’ solutions. He has extensive experience in medical products distribution, and has an MBA from Rice University in Houston, TX.