The price is right

Discounts are a way of life in the trucking business, attracting cargo to fill excess capacity. But what if you're using discounts to chase volume that doesn't exist, or offering unnecessarily large discounts given real market conditions? Finding the right price to optimize both asset utilization and profits on any given bid is no an easy task. Just ask the airlines. A new category of software claims

Discounts are a way of life in the trucking business, attracting cargo to fill excess capacity. But what if you're using discounts to chase volume that doesn't exist, or offering unnecessarily large discounts given real market conditions? Finding the right price to optimize both asset utilization and profits on any given bid is no an easy task. Just ask the airlines.

A new category of software claims it can help fleets make better decisions on pricing strategies and prevent carriers from leaving money on the table. Called “price optimization” software, it suggests the best pricing levels based on a fleet's own records of bids accepted and rejected, as well as other relevant customer volume/price data collected by the fleet.

More importantly, it allows fleet marketers to experiment with various pricing strategies, predicting impacts on volume, profitability, market share or other variables. “With price optimization, you can move discount numbers to actually predict how they will move volume numbers,” says Larry Warnock, vp-marketing for pricing software developer Zilliant. “You can also begin to identify what services really add value that customers will pay for.”

Expedited carrier DHL Worldwide Express is one of the first transportation businesses to use Zilliant's price decision support software. The result in targeted markets has been a 25% increase in volume and a 10% increase in revenue, according to Zilliant. The rental operation at Penske Truck Leasing has also installed Zilliant to help keep its trucks in customer hands while maximizing revenues.

“Too many fleets are like dogs chasing their own tails when it comes to setting prices,” says Warnock. “This is a tool that can eliminate the reactive guess work and really help you understand what the traffic will bear.”

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