Without a software-automated system, the Pittsburgh business unit of Eaton Corp. (stock: ETN) believed the profits realized from the 200,000 pricing negotiations conducted each year depended too heavily on the experience and expertise of individual managers.

In addition, the process took too long, leaving sales people waiting as long as two days to get a price approval.

"We're a large company and we serve many different [markets]," Ray Huber, director of e-business for Cutler-Hammer, said. "We really didn't have a robust pricing mechanism. A lot of it was based on someone's knowledge and we weren't using all the factors that we wanted to use to make a decision."

To tackle it's pricing problem, Cutler-Hammer, whose Cleveland parent company recorded $8.3 billion in revenue last year, turned to Metreo Inc., a Palo Alto, Calif., startup that launches its first product, SR2, next month.

Metreo, led by CEO Daphne Carmeli, a former vice president of marketing at the Netscape division of America Online Inc. (stock: AOL), is targeting Global 2000 manufacturers with the Java-based analytical software.

SR2 evaluates requests for pricing based on product cost, margin, product availability, manufacturing capacity, customer history and other factors.

The Internet-based software can recommend a price, or allow the user to set a goal that a pricing manager or sales person can try to achieve by performing "what-if" analysis that trades off price, quantity, lead-time, and other product attributes.

SR2, which runs on the WebLogic application server from BEA Systems Inc. (stock: BEAS), allows manufacturers to route pricing requests to a manager based on geography, product, and approval rules.

The software, which can run behind the firewall or on an extranet, maintains the history of price requests and other related information in an Oracle Corp. (stock: ORCL) 8i database.

At Cutler-Hammer, Metreo engineers built connectors to draw data from the company's homegrown ERP system, which sits on a mainframe and handles order entry, order management, inventory planning, demand planning, and other business functions, Huber said.

SR2 also had to link to a pricing-request application running on a Microsoft Corp. (stock: MSFT) SQL Server database.

Cutler-Hammer plans to roll out SR2 by early April, restricting its use to a dozen pricing managers. The application will be behind the firewall, running on the corporate IP network, Huber said.

By the third quarter, Cutler-Hammer plans to expand SR2 to 50 more pricing managers and to its entire sales force in the first half of next year, Huber said.

In the second half of 2002, the application may be opened up to channel partners through an extranet.

"We're anticipating a fairly significant reduction in the time required to get pricing to our sales force," Huber said. "If we have a mechanism where they can submit [a price request] and get instant feedback, that's going to be a huge productivity gain for us and hopefully we're going to get better pricing from it as well."

SR2, which is scheduled to ship March 5, will sell for a starting price of between $500,000 and $700,000.