10 Signs You Need a Price Restructure

Author: Paul Reynolds

Title: Product Consultant – Senior Product Expert

Organization: Karmak, Inc.

An effective parts pricing strategy is critical for maximizing profitability. Success is not just about selling more parts at a higher margin. It comes from pricing competitively where needed and maximizing margins where your market allows. A strong pricing structure also reduces time spent on manual adjustments and ensures salespeople can focus on selling.

A price restructure is the opportunity to review and rebuild your pricing strategy from the ground up. It lets you evaluate resale prices, customer groupings, and how you handle pricing exceptions. It ensures you are using every tool in your business system to its fullest potential. When implemented effectively, it increases margin control and streamlines sales operations.

Here are 10 signs it might be time to restructure your parts pricing strategy.

1. Parts Profit Margins Are Low or Declining – A Clear Pricing Red Flag

If your parts profit margins are below industry standards or have been declining for months or years, it is time to assess your pricing model. Market conditions, outdated strategies, and overlooked system settings can all reduce profitability.

2. Too Much Contract Pricing for Customers

Excessive contract pricing can be a sign you are overriding your pricing structure rather than managing it. This creates inconsistency and makes it harder to maintain competitive yet profitable prices.

3. Frequent Price Overrides at Point of Sale

Some price overrides are necessary, but too many mean your pricing strategy is not aligned with market realities. Excessive overrides take up valuable sales time and can erode margins.

4. Outdated Price Update Configurations

If your price update configurations have not been reviewed since they were first set up, they may no longer support your profitability goals. Regular reviews ensure pricing remains accurate and effective.

5. Business Growth Through Location Expansion

Expanding into new markets and adding product lines requires a pricing strategy that reflects the competitive landscape in each location. A one-size-fits-all approach can limit your ability to maximize margins.

6. New Management or Ownership

When leadership changes, it is an ideal time to review your pricing strategy. Understanding your business system capabilities and adjusting your approach can help you achieve new financial goals.

7. Changes in Parts Sales Strategy

If your sales approach has shifted, your pricing should change with it. Adjusting for new customer types and market segments ensures your strategy stays competitive and profitable.

8. New Product Lines That Differ from Your Core Business

When adding new product lines, incorporate them into your pricing structure from the start. Failing to do so can lead to margin leaks and pricing inconsistencies.

9. Too Much Time Spent on Pricing Maintenance

If pricing maintenance consumes significant time, a price restructure can simplify the process. A streamlined strategy is easier to manage and allows more time for customer engagement.

10. Not Utilizing Best Practices in Parts Pricing

Your business system likely includes pricing tools and best practices that can increase margins. Fully leveraging these capabilities can boost profitability without broad price increases.

Why a Strong Pricing Strategy Matters

Restructuring your parts pricing strategy is more than adjusting prices on part numbers. It means understanding your business, knowing how you compare to the industry, and using your system’s capabilities to the maximum. The right pricing approach improves margins, reduces manual work, and ensures consistent, competitive pricing for your customers.

Need help implementing a price restructure? Contact your Karmak Representative or email ProfessionalServices@Karmak.com to get started.

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