Customization vs Configuration: Understand the Difference

Customization vs Configuration – what does it mean? There are a lot of differing definitions of the terms “customization” and “configuration” out there, each correct in their own way but few of them helpful in gaining a simple high-level view in order to make decisions on software purchase. 

Pricing software has become an essential tool for businesses in today’s competitive market, enabling organizations to participate in fruitful analysis and optimization of their products’ & services’ profitability. When it comes to implementation of pricing software however, business’ face this challenging subject of customization vs configuration. Comprehending the spectrum of blurry options is hard enough, let alone making a decision that draws a line somewhere in the sand between the two. 

For a business that sells products or services seeking to improve margins or optimize revenues, it can be hard to know what you’re shopping for in a software vendor. Is what you’ve got in mind classified by software people as out-of-box functionality? Or do some of your requirements for software fall into their definitions of “custom” and thus require new ground be broken? How many of your “custom” requirements could actually be accommodated by a flexible software product without needing platform customization? What does platform customization even mean!? 

At Pricefx, we are a leading pricing software vendor with more than 12 years of experience in the industry. During that journey, we have helped numerous businesses in defining what customization and configuration mean to them, and making an informed decision as to which is right for their organizational goals and objectives. 

In this article, we will outline an overarching definition of these terms and what they mean in the pricing software space and examine the benefits and drawbacks of each. 

What is Configuration? 

Configuration is the process of tailoring a software solution to meet your specific business needs without making fundamental changes to the software itself. It’s like adjusting the settings on a device to make it work just the way you want it to. 

Configuration can involve a range of adjustments. These might be simple changes, like modifying the layout of a dashboard or setting up specific workflows. Or they could be more complex tasks, like defining business rules or setting up connections with other systems you use.

The beauty of configuration is that it allows you to adapt the software to your needs while keeping the core structure of the software intact. This means you can benefit from updates and improvements from the software provider without worrying about compatibility issues. It’s a way of making the software work for you, while ensuring it remains reliable and efficient in the long term.

Configuration in Pricing Software 

Configured pricing software allows businesses to tailor their pricing strategies to meet specific needs and goals, which can in turn lead to increased revenue and/or profitability. 

Configuration of a ready-to-use pricing tool can effectively narrow the divide between your business’s specific requirements and the software’s inherent capabilities. This is achieved without the need for comprehensive alterations, which can often be resource-intensive and time-consuming. 

While a heavily modified pricing system might cater to your needs with exceptional precision, this journey is often more demanding in terms of time and resources than anticipated and is far more susceptible to errors and project setbacks.

For example, Pricefx Accelerators are designed to expedite the configuration of your pricing and business efficiency solutions. They address key aspects such as price list simulations, price building rules, quotations, and rebate management, among others. These Accelerators provide a foundation that can be adapted to your specific needs, offering a balance between configurability and speed. The goal is to get you up and running quickly and efficiently, without the need for extensive amounts of configuration. 

The Pros of Configuration  

Configuration offers a flexible and cost-effective approach to tailoring software to your specific needs. It allows you to adapt the software to your processes, while delivering on value quickly without incurring substantial technical debt. 

When you choose to configure a software product, you’re: 

 

• More likely to have a useful product, sooner ( much faster Return on Investment (ROI) ) 
• Decreasing the total cost of ownership of the software (TCO), because it stays performant and maintainable as a core product 
• Not taking on substantial technical debt as with traditional custom builds or deeply customized solutions 
• Leaning on prescriptive abstracts which are already proven to fit their purpose 

By choosing configuration, you are not just choosing a more cost-effective and efficient solution. You are also choosing a solution that can be adapted to your needs as they evolve, offering flexibility and scalability for your business. 

Over the past decade, Pricefx has gained valuable insights into our customers’ need to support diverse requirements, but without significant capital outlay to get started. In response to this feedback, we developed a mostly pre-configured version of our pricing software (the Accelerators as mentioned above), particularly for companies that do not require a highly tailored system. While we offer many depths of configuration options, we understand that not all organizations need them. 

The Cons of Configuration 

Honestly, when done perfectly, there aren’t any cons to a configurable software product. But that is just the thing, architecting software to be a perfect parity between flexibility & prescriptiveness is a near impossible challenge.  

On one hand, you might appreciate something that ushers you down the right path toward solving problems for your requirements, but if it’s not adaptable to your nuanced approach it quickly becomes useless. 

Have you ever tried on a “one size fits most” hat or hoodie and thought;  

 

“Who on earth is ‘most’? – this thing isn’t even close to a good fit!?” 

Two more significant & related factors to consider with configurable software are the learning curve and domain specificity. In other words, the skills required to configure these products are hard-won and often not transferable to other products or industries.  

This leaves you with a decision to make:  

• Invest your own time to learn these skills? 
• Engage a partner who already possesses them?
• Or perhaps even invest in training your workforce and establishing your own center of excellence? 

Further to that, if you are going to invest in up-skilling yourself or employees to work with a configurable software product, consider how open and traversable the documentation is for that product. It might be that it takes more time traversing the hidden knowledge of a proprietary product than building your own! 

That is of course why Pricefx is so open with our knowledge base and our developer API’s, and even offer training & certification in the configuration of our product. 

Configuration can be a little more work upfront but in the long run you become more self-reliant and can save money on changes you might need in the future. 

What is Customization? 

Customization in software solutions is a double-edged sword. While it offers the allure of a perfectly tailored system, it involves altering the core structure of the software to meet specific, often unique, business requirements. 

Unlike configuration, which works within the existing software framework, customization delves into the product’s inner workings.  

 This process, while potentially yielding a highly tailored solution, requires significant resources and technical expertise, and can introduce risks and complexities often not worth exposing yourself to. 

Customization in Pricing Software  

Customization in pricing software is a practice with deep historical roots. In the early days of software development, customization was often the only way to tailor a solution to a company’s specific needs. It was a necessary step on the path to the flexible, configurable solutions we have today. 

However, the software landscape has evolved significantly.  

Customization in pricing software is a relic from a bygone era. Today’s solutions offer such flexibility that they have rendered deep customization largely unnecessary, marking a new era of adaptability and efficiency in pricing software. 

The Pros of Customization  

While the need for deep customization has diminished, it is not entirely obsolete.  

There are scenarios where it might still hold relevance, particularly for companies making do with legacy systems. These organizations might find value in customization as a means to extend the lifespan of their existing infrastructure. It’s about finding the right balance between the past and the present, between customization and configuration, to meet the unique needs of each business. 

The Cons of Customization 

While customization MIGHT get you where you need to go, it’s critical to consider the drawbacks first. Platform customization often comes with increased complexity and cost, both of which can significantly impact the total cost of ownership (TCO) and the risk of project failures. 

• Increased Complexity: Customization often involves altering the core structure of the software, which can significantly increase its complexity. This can make the software more difficult to use and maintain, and it can also increase the risk of errors or system failures.
• Higher Costs: Customization is typically more expensive than configuration. It requires more resources, both in terms of time and money, and requires specialized technical expertise. These costs can add up for anyone who values ROI. 
• Longer Implementation Time: Customizing software can be a lengthy process. It requires careful planning, development, and testing to ensure the customized solution meets the business’s needs and functions correctly without breaking core functionality. This can delay the implementation of the software and prolong the time it takes to start seeing a return on the investment. 
• Reduced Flexibility: While customization can provide a highly tailored solution, it can also reduce the software’s flexibility. Once the software has been customized, it can be difficult to adapt it to changing business needs or to take advantage of new features and improvements from the software vendor. 
• Limited Scalability: Customized solutions can sometimes struggle to scale with a growing business. As the business expands and its needs evolve, the customized software may not be able to adapt quickly or efficiently enough, potentially hindering growth and performance.
• Uncharted Territory: Customizing a product to do something it might never have done before can lead you into uncharted territories. In these situations, you may find yourself without vendor support for your unique use case. 

Why Pricefx Configures Rather Than Customizes Pricing Software 

As we alluded in our ‘configuration definition’ above, at Pricefx as the world’s leading native-cloud enterprise-level pricing software vendor, we have never shied away from seeing the world of pricing software quite differently. And the topic of customization vs configuration is no different. Times have changed and we prefer to offer our customers a brave new pricing software world devoid of remnants from a legacy technology past. 

At Pricefx, we welcome and delight in configuring flexible pricing software solutions for our clients that they can self-manage with just a small amount of training, or easily with the assistance of one of our partners (depending on your internal resources). 

 

Pricefx is adept at handling BOTH simple configuration (no or minimal configuration using pre-configured Accelerators) AND heavy configuration (complex logic that can be written in a fully featured programming language (Groovy/Java)) that can meet any business requirement. 

 

However, internally, we see customization as something belonging to ‘old school’ legacy pricing vendors that do not offer the same level of self-sufficiency, scalability or maintainability to their clients. 

 

At Pricefx, we see customization as something requiring continual maintenance and significant amounts of ongoing change management with the vendor, impacting the ability of businesses to upgrade their pricing software solution quickly seamlessly and find (ROI) fast. 

But of course, we recognize that every business has its own niche pricing strategy, market, customer segments, and product portfolio, which may require a tailored pricing approach.  

Regardless of the integration route you may want to take for your pricing software, you might need some specialist help in getting the job done.  

If yours is a business that is on the lookout for a pricing software solution with assistance from a dedicated strategic pricing partnership or even a system integration component, then learning more about the Advantage Pricefx Partner Network and the partners available should be your first port of call.  

To learn more about the benefits of working with a pricing software partner, check out the handy article link below:

Or if you feel that you already have the internal resources to get your pricing software up-and-running now, talk to one of our pricing experts now. 

Happy Pricing!