Do I Need A Pricing Team To Use Price Management Software?
Pricing software is not cheap, and investing in a pricing solution is a big decision. Congratulations, you’ve made the decision to use price management software to alleviate pressing business pains. If you’ve made the right choice, the software you want will save you time and spark a not minimal ROI. So, if price management software does all that, do you even need a pricing team to use the software? The short answer is “yes”.
Over the past decade, we at Pricefx have learned that pricing software is not for everyone. While we enjoy helping companies build resilient pricing strategies that drive them toward their pricing goals, we also believe being honest with them about how suitable it is for them.
In this article we’ll explore why you need a pricing team to manage price optimization software, what we mean by team how your current situation and long-term goals should influence your decision to invest.
Why You’re Right To Be Considering Pricing Software
Is it just us, or does it feel like decades since the pandemic sent us all into a never-ending spin of pandemonium?
After enduring severe disruptions to the supply chain, shortages in raw materials, increases to costs, fluctuations in demand, and shifting customer behavior, we’re now facing a whole host of new difficulties as a result of the war in Ukraine.
In a time when “the status quo” is synonymous with “anything could happen at any time”, now, more than ever, companies should be working to code resilience into their pricing strategies. It is essential that your company has the ability to duck and dive with what the world has to throw at us as well as the adaptability and agility to survive long-term disruption.
Pricing software will help you reprice in an instant to ensure your prices always reflect fluctuating raw material costs and you’re not sacrificing margins to latency. It will help you maximize profit from each and every transaction by helping you price at the customer and product level, taking your entire waterfall into account. It will ensure your bundles and discounts work toward your business goals and will steer you clear of cannibalization. Not only will price management solution guide you to new opportunities, but with it, you’ll be positioned to leverage them.
All this, no doubt is why you’re considering investing in pricing software (and reading this article). So let’s get into the question of whether you need a pricing team to manage pricing technology.
What If You Don’t Have A Pricing Team?
First, let’s define “pricing team”.
This doesn’t have to be a group of pricing specialists called “my pricing team”, many organizations don’t have a function around pricing, it is very common that any activities related to setting, adjusting, reviewing and monitoring prices fall in teams that do other things as well, and in some
cases it might fall into multiple teams across the organization. If your Finance person has been handling pricing of products (even though it’s not technically part of their job description), they count as your pricing team and you might consider investing in pricing software in order to take some of the tedious manual tasks off their plate. Yes, someone at this level would be capable of using the basic capabilities of a solution to manage very simple pricing processes (like managing a simple cost-plus pricing strategy—because in this scenario this is likely what we’re talking about). However, in our opinion, pricing software would be overkill for this and a waste of money. You can handle that level of pricing with an Excel Macro.
So, your decision to invest in pricing software is not just based on whether or not you have a pricing team, but on what you’d do with the software if you had it.
What If You Want More Than Simple Pricing Processes?
If you want to go further than simple pricing and uncover more opportunity, then you’re in a good place to be thinking about price management solution. However, you would want a team of people (who at least touch pricing regularly) who can implement and use it.
Does this mean you’re going to need a pricing manager or a pricing analyst? No, not from a headcount perspective, but you’re not going to get the most benefit out of your software if you don’t have the people that can capitalize on the opportunities it brings to the table.
So, we’re going to be honest with you here: if you want to get the most out of your pricing solution, get a pricing team first.
Now before you cry: “But I don’t have the budget for that! I was hoping to replace the need for a pricing team with pricing software!”, read on….
Why A Pricing Team Makes Sense
It’s true, you’re probably going to want to hire a team or expand your existing team, but not because the software demands it… but in order to take advantage of all the opportunities for profit and growth that your new software enables you to leverage.
More people does not dilute the value of those opportunities. If you’re doing things right, you’re going to see that the value of those opportunities far outweighs your need for a greater headcount.
Pricing software is not just about streamlining processes and automating tasks (though this is a huge benefit) it’s also about increasing capacity to enable you to tackle better opportunities and reap greater rewards.
Okay, But What About Initial Costs?
As you set out on your digital transformation journey with pricing software, budget can feel like a major blocker. So let’s look at it this way:
Have you ever had a toothache? You know that going to the dentist to get it fixed is worth the increased pain you’ll likely experience while there, because it clearly outweighs living with a toothache indefinitely.
Well, not investing in a pricing software and the team to leverage it due to cost is like not going to the dentist because it’s going to be painful. So you live with a constant ache in your pricing processes for as long as your company survives.
Yes, it’s scary. Yes, it’s an outlay… but the rewards far outweigh the difficulties.
Giving Pricing the Priority it Deserves
Investing in pricing software is a big financial commitment and it’s not for everyone.
If your pricing department is Ed from Finance, on Wednesday mornings, and his main job is working out a percentage margin across the board, then he’s going to be “happier” in Excel (to be honest though, he is not happy, Ed does not like to have to wait for Excel to run the hundreds of formulas and dreading the times it freezes and leads him to lose his work thinking “there has to be a better way”).
But if you’re looking to optimize your pricing processes and code resilience into your strategy, then pricing software managed by dedicated pricing professionals should be a top priority for your business.
If you’re interested in finding out more about investing in pricing software, read our upcoming article about what happens to your existing pricing team when you bring in a pricing solution. Or if you’re ready to dive in immediately, then learn about: