In an HVACR Trends article earlier this year, the challenges facing HVAC distributors in today’s market underscored the crucial role that pricing plays in driving profitability. As part of this conversation, our own CEO Nelson Valderrama contributes his insights on why distributors need to rethink their legacy pricing strategies in order to adapt to the current business climate.
Nelson points out that traditional pricing approaches are no longer sufficient in an era of economic uncertainty, increased competition, and shifting customer expectations. While many distributors are hoping for a return to normalcy, Nelson warns that relying on outdated pricing models can hinder growth and profitability.
Breaking Free from Legacy Pricing Practices
For many distributors, relying on “tribal wisdom” or gut feelings to set prices is still the norm. But, as Nelson emphasizes, this approach won’t hold up in a marketplace where customers are increasingly informed and price-savvy. Today’s B2B and B2C buyers are armed with vast amounts of information, often conducting their own research on product quality, service, and pricing before making decisions. This shift in buyer behavior demands that distributors break free from legacy pricing practices and implement more agile strategies.
According to Nelson, HVAC distributors that fail to adapt to these new realities risk losing sales and their ability to maintain healthy margins. Static pricing plans that don’t respond quickly to market fluctuations can erode profits over time. The solution? A dynamic pricing framework that’s capable of adapting in real-time to customer demand and competitor pricing shifts.
The Power of Agility in Pricing
Nelson is a firm believer in the power of agility. In the article, he shares a compelling example of a distributor that invested just four months into deploying dynamic price guidance before the COVID-19 pandemic. By fine-tuning their pricing strategy every quarter, the company achieved a remarkable 11X ROI. Even in the post-pandemic economic slowdown, this agile pricing model helped the distributor maintain profitability when others struggled.
This success story underscores the importance of building a pricing framework that can "bob and weave" with market changes. Rather than holding tight to outdated pricing models that assume stability, Nelson advises businesses to prepare for ongoing volatility. And in today’s HVAC market, that means utilizing AI and machine learning to automate data analysis and empower sales teams with actionable insights.
AI & Machine Learning: The Future of HVAC Pricing
At the heart of this shift is the need for real-time, accurate data. Nelson highlights how AI and machine learning are transforming the way HVAC distributors approach pricing. These technologies enable businesses to analyze transaction history, monitor competitor pricing trends, and anticipate customer behavior—all in real-time.
By integrating predictive analytics, distributors can give their sales teams a competitive edge, equipping them with the insights they need to offer the right price at the right time. This proactive approach strengthens customer relationships and helps distributors maximize their gross margin return on inventory investment. Instead of relying on instinct or historical data, sales teams can make data-driven decisions that protect profits and boost overall performance.
Why Act Now?
For HVAC distributors, the window for action is now. As Nelson points out, staying the course with outdated pricing methods is no longer an option. The goal is to create a strategy that’s not only reactive but also anticipatory—one that enables your business to thrive in uncertain economic times.
Take the First Step Toward Smarter Pricing
Want to learn more about how to transform your pricing strategy and unlock hidden profits? Dive deeper into Nelson’s expert insights by reading the full article on HVACR Trends. Don’t miss this opportunity to prepare your business for the future.
