The Internet provides the ability for business interactions to become more transparent. Many distributors have used systems that integrate them with GCs and contractors to ensure projects are kept on schedule; distributors and manufacturers have been streamlining their processes through EDI, VMI, POS and SPA systems; and training is frequently done over the web.
With increasing transparency, however, comes the opportunity to promote pricing to a wide audience. Many companies use a “list”, “MSRP”, or promotional price to drive demand (or like Amazon, an everyday price.)
Recently we ran across a company that is 
promoting electrical material pricing, and comparisons, to electrical contractors. The site is called RealPricer. It features a catalog number, product description, trade price, and then three other prices (median price, highest price and lowest price). And as you would expect, the lowest price is significantly significantly lower than the trade price in most instances.
Essentially, the system appears to be telling contractors what other contractors are paying across the country. Or in other words, how to accelerate margin suppression, and possibly deterioration, for distributors (and eventually manufacturers).
While everyone has the right to charge as they see fit, we found it interesting that RealPricer is operated by Vision Infosoft, which has a relationship with Material Express, which provides product and pricing data to distributors, and Invoice Connection, which provides e-invoicing and other outsourced billing services for distributors to their customers. Or think of it this way, they have access to manufacturer content (to push to distributors) and distributor pricing (through management of the billing system).
Consider:
- Could the pricing be harvested from actual distributor / contractor invoices? Remember, the three companies have common management teams.
- Could you be contributing to pricing transparency throughout the industry?
For an industry that is challenged with increasing margins, RealPricer can make it even more difficult to improve your profitability.
We advocate e-invoicing as a strategy to reduce operating costs, improve customer satisfaction and improve cash flow. Many distributor ERP systems have the capability to enable a distributor to implement e-invoicing on their own. While outsourcing can be cost effective, it could also be a contributor to enhanced pricing transparency. Buyer beware.
With others trying to make price more transparent in the industry, it begs the following strategies to consider:
- Have you recently conducted a price competitiveness survey to better understand your rmarket? Are you known by your pricing strategy?
- When was the last time you reviewed your price matrices?
- Should you consider a pricing audit to better identify your pricing challenges, and then fix the problems?
- If the market focus becomes price, do you need to reconsider your unique selling proposition and enhance sales and marketing to better, more clearly, differentiate yourself to each applicable audience?
Your thoughts about price transparency and competing against / with price.
37 Comments
Confidentiality is a critical component of any business relationship. As a service provider we place a high priority on ensuring the privacy and security of all data. The integrity of our customers data is an important part of the value we provide to our customers and is specifically highlighted within our agreement.
It is disappointing to see a conflict like the one referenced in your blog that impacts the value a service provider brings to a market they serve.
What’s with these guys?
Seems like this group of companies got sued a few years back for using data with out permission. Apparently they are doing the same thing again, except now they are suppressing distributor margins in our area.
The lesson we learned the hard way was to do our own invoicing in house. We took the time to learn our ERP system. We use Trade Service data and images. And by the way Trade Service with their new SX pass through quote system is right on! This provides us value in the quote process.
A National Distributor.
Are these guys really trying to serve the distributor community in this fashion! This has negative ramifications to every distributor in the country.
All I can say is WOW!
Mitch, you should be able to take every customer they have with this information…….!
This message is directed to those distributors that are using the e-invoicing from Invoice Connect…SHAME ON YOU if you knew this was going on! How could you support this.
A distributor doing e-invoicing on their own……
In our case we asked all sorts of questions up front.
We didn’t know that they were collecting our contractor customers and prices.
It came back to bite us about month ago.
A small ED in NE.
We asked a lot of questions too, but it did not occur to us to ask if our invoice infiormation was going to be used to set prices with contractors….We have a decision to make, but not before a serious conversation with Mr. Mazonni….
We made a decision almost a year ago to leave Invoice Connection and switch to Bill Trust mainly because of pricing and a “trust” concern. This only proves that we were right with our decision and defines why I have been a strong reference for Bill Trust and their perspective customers. Their name says it all “BILL TRUST”. They are more than a service provider, they are a business partner who strives to exceed their customers’ needs.
Do y’all read? This is a service for Electrical Suppliers. Look at the website!
Doesn’t matter…..If they are taking data from distributor invoices, via their Invoice connection service, then repurposing and providing it to the market, that is not right. You are dreaming if you don’t think this is going directly to your contractor. What will your response be when your contractor hits you with this pricing? Uh, dunno….!
This is from Vision website directly. Vision owners own Invoice Connect. With this statement they have on their own site, do you really think they are not providing invoice data to contractors?Where do the Target prices come from? Epic is their contractor product!
“Vision has sources nationwide that supply us with actual prices paid by buyers. We continuously analyze these data feeds using our own proprietary methods to determine accurate Target Prices. No other source has the Target Price accuracy like EPIC DUO.”
How about taking a different approach such as selling products that have little or no competition so that the importance of pricing data is less pronounced. Selling the same commodities will always make the discussion focus on price. Pioneer new technology and innovation and price is less of a factor.
As a long time happy customer of Invoice Connection, I was very concerned by this article and immediately phoned my contact at the company.
I just spoke to the folks at Invoice Connection (which might have been a good idea for Allen Ray before publishing this piece).
Apparently, RealPricer is just in the concept stage and they put together a prototype. Invoice Connection is now in the process of contacting customers and asking their permission to participate in this program, for which they are offering substantial additional discounts (both on Invoice Connection and RealPricer when available). They never divulge any information to third parties without express permission.
Apparently, they are getting a very favorable reaction from the industry, and a number of large distributors have already agreed to participate in contributing data to RealPricer. I agree that this is a great idea.
Also, they informed me that RealPricer, when it is available, is only for electrical distributors. I think it will be helpful to many of us.
It is unfortunate that this rumor was published without anyone trying to verify the facts. I’m sure if you call Invoice Connection, they will set you straight.
After reading the last post, it is interesting to note that the first comment is from Bill Trust AND that Allen Ray is frequently paid by Bill Trust to speak at their gatherings, etc. Sounds more like a smear campaign than journalism to me.
they now say “electrical suppliers” but if you look at the picture it doesn’t say this. And why would distributors need this infrormation. Isn’t pricing between manufacturers and distributors? Do manufacturers want a range of prices shown to distribution? Also, don’t contractors “supply” product to their customers. If we as an industry post pricing for anyone/everyone to see, will we ever get more than 2% profit … shame on us. Manufacturers should revolt on someone / anyone who provides information to these guys
I don’t know about you, but we spend a lot of time checking around to see what people are really paying for materials. Of course our cost comes from the manufacturer, but just because we buy a “widgit” for $5.00 doesn’t dictate what we will charge. We like to know the market price so we don’t undercharge or overcharge. Sometimes one of our sales people will say “Our customer Joe says he can buy wigits for $5.50”. I want to know if that is true, and/or what the going price is.
Let’s not fool ourselves. There is obviously value for distributors to get their competitor’s pricing. There is negative value in sharing our pricing with our competitors.
So in effect, if you use Invoice Connection, and this service is for real, either your competition will benefit by getting your pricing, or contractors will benefit at your expense. A no win situation.
This was absolutely a smear campaign. It is very disappointing that a consultant / 3rd party would generate such an article. If Allen Ray has affiliation with a competitor of invoice connection, he should have disclosed that relationship in the article to maintain the integrity of the information of what was published.
I have always been concerned to the security and integrity of my data when it is sent outside of my company. Invoice Connection has been nothing but Perfect since I started using them over 5 years ago.
As to the debate of whether or not you should contribute your pricing to a service or even use a service such as RealPricer, I believe this is not the topic of discussion of the blog posted. Be sides how can you condemn or endorse a product by the tainted words of this article!
Personally I would never give out my SELL or COSTS to anyone. No matter how anonymous they make it, if your market is small enough and the drill down of the sampling is tight enough, you are going to expose our competitive advantages.
Much has been written here about Invoice Connection and RealPricer – most of it incorrect. We would like to set the record straight.
RealPricer is, at present, a conceptual product which was put together earlier this month by MaterialExpress and RealPricer to show to a few industry leaders to gather their input and feedback. Regrettably, some individuals chose to make public this private demo version, and a number of people have jumped to conclusions.
The idea behind RealPricer is to create a service for electrical distributors that will provide them with information on sales prices which have been aggregated from dozens of points throughout the country. No specific information would be given – and no one would ever be able to determine at what price their competitors are selling. RealPricer, as currently designed, will provide average prices, as well as high and low selling prices. In the end, it is up to the distributor to choose at what price to sell their materials.
The data would come from Invoice Connection customers who choose to participate in contributing to this service. No Invoice Connection data will ever be given to a third party without the express written permission of the customer.
Furthermore, RealPricer, if and when it is introduced, will be a subscription service which is only available to bonafide electrical distributors (proof must be provided in the form of NAED membership and/or an invoice directly from a manufacturer). RealPricer will not be available to contractors, if and when it becomes available.
While we are quite early in this process (the concept web site was created just a few weeks ago), the preliminary response has been excellent, both from the few Invoice Connection customers with whom we discussed the contribution of data, as well as from MaterialExpress customers who are interested in subscribing to this innovative service. A number of our Invoice Connection customers have already agreed to contribute data once we have achieved a “critical mass” of participants. Distributors can also choose to participate in contributing data without subscribing to Invoice Connection; some have chosen the latter because they can identify contract sales prices.
We regret the confusion caused by the information in this blog and the rumors surrounding it which have clearly been fueled by our competitor (who has, in the past, paid the author of the blog for promoting their service). We would be glad to respond individually to any of your comments and criticisms at ebeutler@materialexpress.com
What Invoice Connection is doing is absolutely wrong, unethical and totally self serving at the expense of every one of us hard working distributors. Our margins are down to the bone and the market is killing us. We have 3 branches and we’re struggling to stay alive. This is the exact kind of activity that will put many of us out of jobs and out of business and will utlimately hurt the contractos. Kudos to Electricaltrends for smoking out these rats. RT
In defense of Allen Ray, it’s totally unethical and criminal for Invoice Connection to use a distributors pricing information to serve its electrical contractor market without informing the distributor that they are going to use the information against them. Doesn’t seem legal to me but then again I understand these guys aren’t trustworthy or honest.
They’ll never get a dime of our money or our data.
Mr. Butler, I have no idea who you are or where you came from as you certainly don’t come from this market. With this said, how can you possibly believe this to be a good thing? You can pretty it up any way you want it, but please don’t try and tell us this is positive.
I’m not sure who this Earl is, but I suspect he’s an employee or perhaps a principal. Regardless, how does a distributor trust giving Invoice Connection there very precious and confidential pricing information when the company primarily serves the contractor market. If we decide to outsource our billing, Billtrust is the company for us and it should be for every distributor looking to outsource this activity. Shame on you Invoice Connection for decieving your customers!
I’m a bit confused as to why the RealPricer page on Electrical Trends says “Real World Pricing on thousands of the most common electrical items, but when you go to the http://www.realpricer.com the title has changed to Electrical Supplier Pricing. Could it be that it was changed as a direct result of being outed by Electrical Trends to focus it way from contractors?
Fun to see so much passion behind the blog. Its about time someone stood up for what’s right and called out this company and there farcical management team. I first new of these companies when I was a contractor and they had a very checkered and dishonest past. It now appears they are bringing that same bad behavior to distribution.
The best thing to do is simply not buy there products or there retoric.
I’ve known Mitch and the team from Billtrust for many years. They are very professional and service orientated. Mitch/Billtrust is someone you can count on and trust.
Mea Culpa, Mea Culpa, Mea Culpa. We didn’t know we needed to discuss our client list.
To set the record straight, there is no business relationship with Billtrust. Over 2+ years ago, research was performed about the concept of electronic connectivity and delivery of e-invoices to distributor customers. Billtrust had NO input into the research or the resulting white paper. A web presentation was given by Channel Marketing Group & Allen Ray Associates about the concept of e-connectivity and e-invoicing.
Earl,
Regarding your post to Electrical Trends regarding Real Pricer. How do you plan to stop contractors from getting data from your site and passing it around…? The word on the street is that the security on your site is extremely lax and anyone can get into it.
As I mentioned, this is only a prototype site without any meaningful data. It was meant show a few individuals (privately) what we envisioned.
Assuming we go forward with RealPricer (and it is just a concept at this stage), it will have full password protection and only be available to subscribers (who must be actual distributors)
this guy must think us distributors are stupid or something. Even I know, from my IT department, that we develop prototypes (when we changed our website) on a staging server so it wasn’t in public view until we were ready but we could share the site with selected people. And they work with technology. If they are this dumb, I wonder why people work with them
don’t insult our intelligence
This group of companies have a long history of margin supression and market disruption.
I am pretty sure that we read where they got sued using someone else’s data. Now they are back at it again. They gave us a pitch and we never heard anything about them asking to use our sell prices or that they would contact our customers to sell them estimating systems and product data that came out of our system.
Now they publish product cost out in the open. What next?
They must think that distributors are stupid. They have NO CLUE about distributors.
Warn your fellow buying group distributors friends.
An electrical distributor up East
I find it amazing that all of the most vitriolic comments are coming from postings by “Anonymous” contributors. Why would I put any credence in the comments of anyone who refuses to identify him/herself? I would just assume that those comments were from a competitor or someone with an axe to grind.
As it happens, Billows Electric is one of the Distributors that Material Express asked to evaluate their prototype website. We have used the Material Express price update service since 2002, and we have always found the company to be very honorable.
No, they were never sued for using “someone else’s data.” They were sued by Trade Service for sending their price updates in the same record format that Trade Service used. This format was also used by IDEA for those distributors who were not able to use the original EDI format. That suit was settled years ago.
I believe Material Express when they say that they would not use our data without permission because, ethical considerations aside, it would probably mean the destruction of their company if this was discovered. And it certainly would be discovered.
We are also concerned about the confidentiality issue, and we would not allow the use of our data unless we were 100% comfortable that the data could not be identified as ours. Hopefully, if Material Express ever takes RealPricer out of the “Vapor Ware” stage and turns it into a real product, there will be enough companies participating to assure this.
I think RealPricer would be a very useful service for distributors. As Pricing Manager for Billows Electric, I frequently get complaints from our Sales Reps that the price of a specific item is much too high or much too low. Having a service like this just to tell us if we’re “in the ballpark” would be very helpful.
Spencer Field
Pricing Manager
Billows Electric Supply
spencerf@billows.com
I am very dismayed that my good friend Allen Ray would publish a story like this without checking his facts.
I have always held a very high opinion of Allen, but this article, which makes Allen imminently qualified as a reporter for the National Enquirer, is something that I never would have expected of him.
Spencer, why not reveal that you worked for Material Express? Just in the spirit of being open and honest…………
“Just in the spirit of being open and honest” is an interesting phrase coming from an ANONYMOUS blogger.
I’m guessing you are not an impartial contributor with no “axe to grind.”
Yes, after I left TradePower in 2002 and before I started with Billows Electric in 2005, I was an Independent Rep for Material Express for about a year. I sold their APEX Price Updating Service to many Electrical Distributors (including Billows Electric) who are still using this service and are still very satisfied with it.
So, yes, my experience with Material Express extends beyond Billows Electric, and I stand by everything that I said about Material Express in my previous post.
“Have you ever noticed that the one who protests the loudest are usually guilty of the crime?” Spencer and Earl must be in favor of price suppression. Other wise why would they be in favor of publishing what a distributor pays for product or sells it for. For that matter why expose it in the open market?
This is about distributors who risk their capital(money) and bet they have bought the right product so they can sell for a profit. It’s no wonder we have a hard time making a profit in the greater Philly area.
Spencer and Jim, I know both of you personally and it is disappointing.
And NO I will not tell you who I am.
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