How to Unlock Pricing Potential Trapped in Minds and Excel Sheets
August 31, 2020
Release the Pricing Potential Trapped in the Minds and Excel Sheets Of Your Organization
Global spending on digital transformation is predicted to grow to $1.3 trillion in 2020. But, a Pricefx survey of pricing professionals found that 54% still relied on Excel as their primary pricing tool, as opposed to cloud-based software that offers far superior performance for reasons discussed in this piece.
This startling figure shines a light on the lack of investment that companies are making in their pricing infrastructures, and hints at the masses of powerful pricing discoveries that lie trapped in Excel documents and the minds of those that manage them.
Pricing is your direct route to profit – the lifeblood of every business. After all, a 1% rise in price can yield an 8% increase in operating profits. Its optimization is essential and provides a wealth of strategies and opportunities to compete and dominate any market. We take a look at how a systemic reliance on Excel is holding companies back, and how you can leverage the power of pricing software to empower pricing analysts and supercharge your pricing organization.
Remove the Burden of Excel from Your Pricing Analysts.
In an episode of Pricing Matters on digital transformation, Chuck Davenport of Bain & Co mentioned that, “many of my clients … start a transformation … have just troves of wisdom locked up in Excel spreadsheets and on hard drives”. Let’s look at why that is.
Excel-reliant pricing systems are inherently “manual,” and that’s a severe drawback. Excel demands constant inputting, formatting, and managing data, which is labor-intensive, time-consuming, and like any other manual process, highly susceptible to human error. Managing unwieldy Excel sheets is a daunting task and one that often falls to pricing analysts to carry out.
The role of the pricing analyst is pivotal to the success of any company. Their function is to determine the most competitive and profitable prices to set for products based on a broad range of company, competitor, and industry data points. There are three core components to this task.
The first is mathematical analysis – tracking pricing trends in the marketplace to assess a target customer’s willingness to pay, the optimal price points for different products and services, or package and bundling opportunities that best serve customers and profit targets. The second is impact analysis – collecting data that might predict future disruptions to the business and ways to recover from them. And the third is simply ongoing general research – identifying trends indicative of threats and opportunities.
However, all too often, pricing analysts find that their jobs have evolved into mere data-wrangling. They’re so absorbed in the daily grind of data-entry, data-cleansing, and spreadsheet upkeep that there’s no time left over to make meaningful use of their hard-earned data and the game-changing insights on offer.
With the implementation of pricing software, pricing analysts can store all of their once-Excel-based data in a cloud-based platform. Data can be saved as it’s gathered, in real-time (nothing’s ever lost), and AI built into the software carries out ongoing data analysis behind the scenes.
There’s no more formatting and number crunching – the need for constant management of unwieldy spreadsheets is eliminated. And the precious time analysts once devoted to real data analysis is extended exponentially. Valuable findings imprisoned inside Excel cells become instantly accessible, freeing analysts to develop and implement pricing strategies that refine and improve pricing decisions and drive significant value for their organizations.
Enhance Information Sharing and Accountability With the Implementation of Pricing Software.
Using Excel as a primary pricing tool has yet another major drawback – it’s not “connected”. Offline and stored on-prem, it’s a struggle for analysts to effectively share data-led discoveries between each other, leading to an over-reliance on face-to-face exchanges (less than ideal in light of COVID-19) and endless email threads. Precious data frequently slips away as people misplace scraps of paper, and emails are buried with the day’s other pressing issues.
Cloud-based pricing software serves as a single source of truth for all your pricing data. It can be accessed by any team member, at any time, from anywhere. Every user is permitted a level of access in line with their role, and all activity can be monitored, promoting company-wide accountability. Pricing decision-makers and strategists can enact changes that automatically cascade down to salespeople “in the field” without risking miscommunication. It’s the ultimate platform for collaboration and information sharing, unifying an otherwise disconnected salesforce.
Pricing is a Team Sport Requiring Close Collaboration.
To devise and enact optimized pricing strategies within any company, you need to have the correct structures in place to facilitate best practice. In terms of personnel, you need a team with a wide-ranging but complementary set of characteristics and specialisms – a mix of hard and soft skill sets.
Hard skills involve gathering and evaluating quantitative data, estimating product and service value, and creating actionable pricing initiatives. Meanwhile, soft skills involve clear and concise communication of these initiatives and the provision of leadership, motivation, and development for team members.
Pricing software provides a centralized hub that encourages collaboration across diverse sales teams, promoting cross-functional pricing inputs with one point of accountability, under the authority of expert decision-makers.
The Bottom Line – It’s time to Adopt a Cloud-Based Platform.
Relying on Excel-based pricing systems could be having a hugely detrimental impact on your business. Spreadsheets are a productivity drain and a black hole for precious insights trapped within a mass of impenetrable data. Migrating your pricing infrastructure over to cloud-based pricing software unleashes the power of the data your company already holds and allows for the careful capture of much more.
Would you like to learn more about the differences between Excel and pricing software? Join our on-demand webinar “Excel vs. Pricing Software” to find out why using Excel for pricing is a thing of the past.