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Optimizing Formulation Price Performance

Allchemist

In three hours, I made the formulation that costs 28% less than the competitors’ dumping price.

And I still made a profit.

Have you ever been in a situation in which you lost business or a deal because your competitor offered a better price for a similar product? Sounds familiar, right?

Recently, the same thing happened to me as well. It would be a usual scenario in our line of work if I hadn’t lost several deals because of one particular competitor.

I decided to dig into the issue and learned that they were playing “the dumping game.” They sold a particular type of epoxy coating for 2.50 €/kg, while the average market price was around 5.00 €/kg.

I learned that I wasn’t the only one dealing with this.

All the other manufacturers had the same issue with this particular supplier. I learned from the customers that competitors’ coating was not the same quality as ours (and market-typical), but it was good enough to meet the customers’ application requirements. The price was obviously the only important thing.

I got back to the office, logged into the Allchemist web application that we use for R&D and started optimizing our epoxy coating formulation to meet the price requirements.

Allchemist has this great feature that enables me to develop a formulation while it immediately calculates parameters (like density, solids, VOC and more), hazards and the price. I can instantly see the key information of each formulation on-screen.

In three hours, I ended up with a formulation that costs 1.80 €/kg. That’s 28% less than the dumping price, but still brings a profit!

With the preliminary development in Allchemist, I confirmed the assumption that we could produce a similar product and still make a profit.

Lab tests showed acceptable results, but I still had to make some minor modifications to the formulation. Again, I put the new data into Allchemist and confirmed the parameters, hazards and the price, which remained at the same level.

In years to come, it won’t be enough to sell one typical product for many purposes. We’ll have to be even more flexible and develop products meeting more and more customers’ requirements.

Allchemist gives me the flexibility I need. I feel that I’m ready for the future.

If you are interested in how the formulator mixer works, check out this tutorial.

Disclaimer
Information on this blog is prepared with utmost care, but it is not about (chemical) consulting, and the provider does not assume any responsibility or liability for the correctness, accuracy and up-to-dateness of published content. If you need advice for a specific case, you can write to us at info@allchemist.net.

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