ATLAS COPCO/ EPIROC SPARE PARTS PRICING - 4
Thanks to the bonus system in use today a lot of money is given away in various discounts. Discount rates can be important in the business and a lower price is not always better. The discount is probably about the experienced value so it is a balance between the original price and the price given to the customers. Besides the factor mentioned above it is probably important to be able to show a discount rate as a result of good negotiation skills for a customer.
Atlas Copco has similar problems but is now developing a new discount strategy that is supposed to be based purely on volume. At the moment companies have their old discount that once has been negotiated, generally big customers has big discounts. Today they have a new pricing process that only is one year old and they are about to change the discount structure into a transparent ladder. Today customers have verbal or written agreements on what discount they should have and that can be hard to change. They have realized the dissatisfaction it may cause when they leave their old method and the customer understand that he or she is not special anymore.
Atlas Copco is working with a focus of becoming market-based with their pricing process although it is not always the case. They have market specific factors that sometimes can be wrong and therefore the prices are less competitive. But as for Pon Equipment this is not done overnight and is something that should be worked with during a long time while communicated to all customers so that no one is unprepared for the change.
Atlas Copco segments their spare parts depending on competition. Parts with a lot of competition are in a certain product group. There are around 8 segments with parts that are organized dependent upon what type of competition they are facing. It is about what kind of value they bring the customers and how price sensitive the customers are on the specific product. For instance Atlas Copco designed products that are unique are priced with a higher price and a product like filters are priced in a way that is market-based.