In control of margins at individual contract level
Energy is a product that is difficult to differentiate on. This stresses the importance of a right pricing strategy and related services. As a low margin product, pricing can make or break the relationship with your customer. Especially now, during the energy transition. But where do you base your decisions on?
With the Pricing Circle, you can monitor and evaluate pricing with the customer. The Pricing Circle refers to an essential monthly gross margin optimization process -at individual customer level- that starts right after signing a B2B energy contract. It allows you to anticipate margin optimization opportunities and risk indications right away for the contract period.
Some of the benefits:
1. Deal with Delta (contracted pricing versus realisation)
Monthly reports at individual contract level provide insights in the delta between contracted versus realized volume. This enables you to identify underperforming customers and start the discussion on, for example, alternative offers or penalties.
“Many utilities can optimize their portfolios as is – the question is how to get the right data insights. Some utilities still evaluate their realized volume after contract realisation, which is too late to anticipate on.
2. No blind spot for contractual mutations
Contractual mutations are of great influence on your gross margin. By applying the Pricing Circle, you are forced to keep accurate track of these mutations. This provides insights in the prognosed volumes on connection level. Aggregating the volumes allows you to prevent expensive long or short portfolio positions.
3. Optimize your commercial strategy
Drill down to individual contract level and evaluate gross margin on every appropriate level. For example on the level of sales products, customer types or consumption year. You can recognize commercial trends and substantiate decisions to either strengthen successful business cases or phase out less profitable customer groups and energy products.
4. Speed up your improvement-cycle
Monitor individual price components on a monthly base, such as the credit- and imbalance risk basis, to evaluate cost calculations and improve future pricing mechanisms for new contracts. This speeds up your learning curve from annual to monthly refinements.
How Energy21 can help:
- Ready to improve your margins? Energy21 can operationalize your Pricing Circle by setting up the right data and processes using our EBASE platform or consult on the implementation in your current system.
- Curious what the Pricing Circle can bring for your portfolio? By performing a quickscan on your portfolio and processes we can determine what value it could bring to your business.
Reach out to Freek Venneman, Lead Consultant on Gross Margin Optimisation via +31(0)6 5258 99 90 if you like to go more in-depth, or fill in below form to receive our Pricing Circle use case: