One of the key decisions we had to make when designing PricePoint was how to handle net vs gross basis for pricing, an area where our industry has historically lacked uniformity. The overriding consideration for PricePoint was to focus on simplicity, with the conclusion to therefore treat all sizes as gross.
Showing posts with label industry topics. Show all posts
Showing posts with label industry topics. Show all posts
Thursday, November 20, 2014
Monday, August 18, 2014
Corporate RFP Responder
I have recently approved development of an ambitious new tool to add to PricePoint's growing list of features. The working title of this project is "Corporate Proposal Responder" (CPR for short), and we are aiming to unveil it at the upcoming IAM Annual Meeting in Orlando.
Friday, October 18, 2013
Breakpoints - defined and justified
Over the years I've occasionally encountered Agents who have been resistant to honoring tariff "breakpoints", but I'm not sure how widespread the resistance is. I'm going to explain the reasoning on why we believe breakpoints should always be honored, and why we therefore apply breakpoints in PricePoint.
First, let's be clear on what a breakpoint is (some may have a different name for it). A breakpoint is simply applying a larger chargeable weight/volume than actual, because the larger size actually creates a lower price due to the tiered structure of the tariff. For example:
5800 lbs @ $75.00/cwt = $4350
6000 lbs @ $70.00/cwt = $4200
In the above scenario, the higher weight / lower cost breakpoint should be applied. Why?
Most importantly, it's simply the practical thing to do. All things being equal, what justification is there that a smaller shipment should cost more money than a larger shipment?
On a more academic level, breakpoints simply provide a more rational price curve, which is beneficial to sales efforts in terms of not senselessly overpricing a competitive quote.
Consider the following hypothetical tariff:
Now see the following price charts of that tariff, based on breakpoints being applied vs. not applied.
Breakpoint application provides a smooth upward trending price curve, which is rational to increasing shipment size. Without breakpoints, prices erratically jump up/down as the shipment size increases.
For all of these reasons, PricePoint automatically checks for and applies breakpoints on quotes (preventing costly human error oversight). When applied, the quote detail screen displays the higher "Chargeable" shipment size, directly below the actual "Declared" size. A random study of PricePoint quotes revealed that breakpoints are applicable in roughly 1 out of 3 quotes.
First, let's be clear on what a breakpoint is (some may have a different name for it). A breakpoint is simply applying a larger chargeable weight/volume than actual, because the larger size actually creates a lower price due to the tiered structure of the tariff. For example:
5800 lbs @ $75.00/cwt = $4350
6000 lbs @ $70.00/cwt = $4200
In the above scenario, the higher weight / lower cost breakpoint should be applied. Why?
Most importantly, it's simply the practical thing to do. All things being equal, what justification is there that a smaller shipment should cost more money than a larger shipment?
On a more academic level, breakpoints simply provide a more rational price curve, which is beneficial to sales efforts in terms of not senselessly overpricing a competitive quote.
Consider the following hypothetical tariff:
Now see the following price charts of that tariff, based on breakpoints being applied vs. not applied.
For all of these reasons, PricePoint automatically checks for and applies breakpoints on quotes (preventing costly human error oversight). When applied, the quote detail screen displays the higher "Chargeable" shipment size, directly below the actual "Declared" size. A random study of PricePoint quotes revealed that breakpoints are applicable in roughly 1 out of 3 quotes.
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