The days of setting prices once a quarter and hoping for the best are over. While many wholesale distributors still rely on cost-plus formulas and annual price reviews, their AI-enabled competitors are adjusting prices in real time, capturing margin opportunities that static pricing models miss entirely.
This isn’t about sophisticated algorithms replacing human judgment—it’s about giving distribution leaders the tools to make better pricing decisions faster than ever before. And for companies still anchored to spreadsheet-based pricing, the competitive gap is widening every day.
The Hidden Cost of Static Pricing
I’ve lived through the painful reality of manual pricing management at multiple distribution companies, and I can tell you firsthand—it’s a productivity killer that creates more problems than it solves.
At Hisco, we spent countless hours manually updating pricing levels and running reports that were outdated almost as soon as they were generated. Our weeks were consumed by conference calls about pricing adjustments, debating which levels to change and when. The process was so cumbersome that by the time we implemented a price change, market conditions had often shifted again.
RediCarpet was even more challenging. We created elaborate pricing matrices and spreadsheets, dedicating countless hours to ensuring price levels were updated in the system and that everyone was using the most current information. It was an incredibly manual process that didn’t lend itself to excellence. Our teams spent more time managing the matrix than responding to customer needs.
The situation became even more complex when I worked with companies like Grainger and HD Supply, where customer-specific pricing was always a major challenge. Special teams had to be created just to manage these pricing relationships, with dedicated resources constantly updating, tracking, and communicating pricing changes across hundreds or thousands of customer accounts.
Traditional pricing approaches treat all customers, products, and market conditions as static variables. But distribution operates in a world of constant flux. Material costs shift daily. Demand patterns change seasonally. Customer buying behaviors evolve. Competitor strategies adapt. Static pricing ignores these realities, leaving money on the table while creating unnecessary competitive vulnerabilities.
Now, AI-enabled pricing has changed everything. The manual processes that once consumed entire teams can be automated, optimized, and executed in real-time. As Mike Biwer from Cavallo recently noted, “For every 100 orders, they might have 35, 40 orders that have some form of a profit defect in them.” These defects—pricing fluctuations beyond acceptable ranges, cost increases not offset by price increases—represent massive opportunities that dynamic pricing can capture.
Beyond Inflation: Strategic Pricing in Practice
The transformation from my manual pricing experiences to today’s AI-enabled solutions is remarkable. Where we once had teams dedicated solely to managing customer-specific pricing matrices, smart distributors now use AI-driven systems to analyze customer purchase patterns and identify price elasticity by segment automatically.
These systems solve the exact problems I witnessed across multiple companies. Instead of endless conference calls about pricing adjustments, AI platforms provide real-time recommendations based on market conditions, inventory levels, and competitive intelligence. Rather than dedicating teams to manage customer-specific pricing, automated systems handle complex pricing relationships while optimizing for profitability across the entire customer base.
The most successful distributors have discovered that dynamic pricing isn’t about raising prices indiscriminately—it’s about pricing intelligently. They’re identifying which customers will pay premium prices for superior service, which products can command higher margins during peak demand, and which inventory needs aggressive pricing to improve turns.
Consider what Biwer described in a recent industry discussion: showing a prospect “thousands of transactions where cost was up substantially for a given SKU, and price was held constant. They had no idea.” This scenario plays out daily across distribution companies—costs fluctuate while prices remain static, silently eroding margins that dynamic pricing systems would automatically protect.
This approach transforms pricing from a defensive cost-recovery exercise into an offensive growth strategy. When distributors can respond to market conditions in hours rather than months, they create sustainable competitive advantages that compound over time. As industry experts increasingly recognize, you should “know to the penny where you’re making money and losing money—and why.”
The technology enabling these capabilities has matured rapidly. Modern pricing platforms integrate seamlessly with existing ERP systems, providing recommendations that sales teams can implement immediately. These aren’t complex implementations requiring armies of consultants—they’re practical tools that deliver measurable results quickly.
The Competitive Reality
Here’s the uncomfortable truth: While you’re debating whether dynamic pricing is worth the investment, your competitors are already capturing the benefits. They’re winning competitive bids by pricing more aggressively on commoditized products while maximizing margins on differentiated offerings. They’re improving inventory turns by pricing slow-moving stock more competitively. They’re strengthening customer relationships by offering more competitive pricing on high-volume purchases.
The companies that master dynamic pricing first will establish market position advantages that become increasingly difficult to overcome. They’ll have better cash flow, stronger margins, and more satisfied customers—creating a virtuous cycle that accelerates their competitive separation.
Making the Transition
Having managed pricing the old way, I can tell you that successful dynamic pricing implementation starts with acknowledging how much time and resources your current process actually consumes. Are your teams spending more time updating spreadsheets than serving customers? Are you losing competitive opportunities because your pricing process can’t keep pace with market changes?
The transformation begins with understanding your current pricing performance through the lens of efficiency, not just profitability. Which manual processes are consuming the most resources? Where are pricing delays costing you business? How much competitive intelligence are you missing because your systems can’t process market data fast enough?
The goal isn’t to automate every pricing decision, but to eliminate the manual processes that prevent your team from focusing on strategic customer relationships. When sales representatives have real-time insights into competitive positioning, inventory costs, and customer price sensitivity—without needing to wait for updated spreadsheets or pricing team approvals—they can negotiate more effectively and close more profitable business.
The Path Forward
Dynamic pricing represents a fundamental shift in how distributors compete. Companies that embrace this transition early will capture disproportionate advantages, while those who delay will find themselves fighting increasingly difficult battles on margin and market share.
The question isn’t whether dynamic pricing will become standard in wholesale distribution—it’s whether your company will be among the leaders who define how this technology creates competitive advantage, or among the followers struggling to catch up.
Ready to transform your pricing strategy? Join industry leaders at the Profit and Productivity Summit, November 10-12 in Chicago, where you’ll discover the latest AI-enabled pricing strategies and learn from distributors already achieving breakthrough results. The competitive landscape is changing rapidly—make sure your pricing strategy evolves with it.
As Chief Operations Officer of a Distribution Strategy Group, I'm in the unique position of having helped transform distribution companies and am now collaborating with AI vendors to understand their solutions. My background in industrial distribution operations, sales process management, and continuous improvement provides a different perspective on how distributors can leverage AI to transform margin and productivity challenges into competitive advantages.