Finding the right freight pricing strategy that works well for the diversity of your products, customer requirements, and market conditions can be a frustrating process. Set your prices too high and you could scare customers away but going too low will eat into your profit margins. Not providing instant upfront freight prices can push customers to evaluate competitor options but if your prices are not accurate, either you or your customers will end up eating the difference. Fortunately, Pacejet provides a variety of tools to help you tackle the tricky issues in freight pricing and the upcoming Pacejet 15.4 release provides improved access to control your own pricing policies.
Read on to learn more about freight pricing in Pacejet, including new features in the upcoming 15.4 release...
Using A Foundation of Real-Time Negotiated Rates
If you or your shipping team have worked with older software systems, you might be used to the idea of "tariff files", "czar lite", or other data setup as a basic building block in configuring your systems to manage freight rates. With software-based systems, your team would load large tariff files into a database, configure pricing rules to "mark up" costs, and then the software would calculate prices during quoting and shipping processes. While this older technique worked as an approximation it was extremely fragile, and accuracy would quickly degrade as fuel prices fluctuated over time or as users simply could not keep up with required data maintenance. Fortunately modern cloud-based systems like Pacejet directly connect to carrier systems in real-time to calculate carrier costs using your contracts and no locally-stored data (e.g. see example Rate and Ship screen below). So as you consider your pricing needs, it's far easier today to build your strategy on a foundation of "real-time negotiated rates" and know that your prices can fluctuate in alignment with actual costs.
Freight Markup Made Easy
As you implement your specific freight pricing rules, one of the core Pacejet tools you will use are Freight Markup settings that calculate prices as markups or discounts using real-time Freight Costs from carriers. In the Pacejet 15.4 release you'll find a new administration page that makes it easier for you to set various freight pricing controls and change them over time as you measure the impact on your operations. The new controls allow you to easily add or change rules by Consignee, Carrier, Ship Mode, or Consignor using a mix of markup or flat fees. Since Pacejet features like quoting, rate-shopping, or shipping are built around the concept of "connecting to carriers", the prices returned by these configuration settings are linked to your carriers systems to provide better alignment with variables like fuel surcharges, accessorial fees, etc...
Administrators can easily add or change rules at any point and can override one baseline behavior (e.g. markup UPS by 10%) with another specific behavior (e.g. charge customer Acme Inc. a different price). As you manage your pricing rules, keep in mind that the "Show Trace" feature on the Pacejet Rate & Ship screen provides a detailed drill-down on pricing calculations as they are applied during quoting and rate shopping. Other tools that can be helpful include the Shipment Saving and Shipment Summary reports that provide clear visibility of your Freight Costs and Freight Prices for all shipments.
Advanced Freight Pricing
For many companies the basic Freight Markup rules provided in Pacejet will cover the most or all of your pricing needs. To help with more exotic calculations, Pacejet provides an advanced "Custom Rate Rule" feature that our services team can use to quickly configure very advanced freight pricing logic to your setup. Custom Rate Rules can inspect all of the data in your shipments including products, customers, origins, destinations, container sizes, accessorials, and more to entirely change how and when prices are altered to meet unique business scenarios.
Between Freight Markup and Custom Rate Rules, about 99% of shipper rules can be handled with simple system configurations. However some customers find themselves working with very unique systems, special vendors, or in other situations where an entirely new "system of pricing" is needed. To help accomodate these needs, Pacejet supports a very advanced "Custom Rate System" feature that our team can use to create plug-ins for connecting, calculating, or otherwise creating a pricing system that meets custom requirements.
Having tools to implement an effective freight pricing strategy can help drive increasing sales and profitability. Hopefully today's closer look at existing and new freight pricing tools in Pacejet will help you continue to grow your business. Have feedback on this or other topics or a suggestion for a post? We would love to hear from you!