Benchmarks allow you to improve pricing negotiation and pricing strategy while quantifying how you are controlling costs and objectively validating pricing against the market.
For any given part which has coverage, the Benchmark Cost next best cost percentile is when your Manufacturer Part Number (MPN) cost is compared to the distribution of MPN costs within our community database. This is specifically for standard parts if available in the LevaData community. Benchmark Cost is an anchor price for a negotiation; however, it is not guaranteed.
Benchmark Example Illustrated
- Customer MPN # is in grey box = ABC123
- Customer data points considered are in the "Anonymization" row
- Customer data is aggregated in sequence in "Aggregation row" and plotted on the chart to include ABC123's price of $1.00
- If there are any Outliers, such as very low or very high data points, they are not considered as part of the analysis
- The Interpolated Statistical Insights (illustrated in Red Boxes above) are examples of the LevaData 50th, 70th, and 90th Percentiles.
- 50th Percentile: Conservative target (estimate of price point where 50% of the market has your price or higher)
- 70th Percentile: Average target (estimate of price point where 70% of the market has your price or higher)
- 90th Percentile: Aggressive target (estimate of price point where 90% of the market has your price or higher)
- There needs to be at least 5 Data Points from the community to qualify for a Benchmark Opportunity
- The relevant benchmark is often not an exact price that any customer is paying.
- The $0.88 70th Percentile Benchmark suggestion that LevaData would provide in this example qualifies.
- Many factors influence the negotiation for the buyer's attempt to gain this price with their supplier, such as volume and/or geography.
- LevaData can offer a target with statistically accurate benchmark data to give the buyer an achievable goal and/or a good starting point for a negotiation.
For more information on Benchmarking in the LevaData Platform, see: Benchmarking.
Reviewing Benchmark Opportunities
Filter to Benchmark Opportunities
When in the Review Opportunities module, (1) open the controls and (2) pick the Benchmark Opportunities Type, then (3) Apply.
Examine the Opportunities Table
The Review Opportunities table will by default be sorted by Opportunity ($) amount in descending order; however, you may also want to sort by Opportunity %.
Reviewing the Details of a Benchmark Opportunity
Looking into an individual opportunity of this type, (1) the benchmark costs at each percentile gives you a (2) negotiation point of reference to return to your supplier negotiations with. Vetting prices at competitive market rates can be done confidently with benchmarks to bolster your sourcing strategy.
You should now be comfortable reviewing Benchmark opportunities where the LevaData Platform compares your pricing to market benchmarks. You should understand how LevaData anonymizes and aggregates market insights to present them at conservative, average, and aggressive price points. These opportunities will continue to arise whenever your organization loads new MPNs into the LevaData Platform, and you should be inclined to review them at least as often as that occurs.