Everyone enjoys a little negotiation, and it adds spice and color to our B2B. working lives and fosters good commerce. But when we get ino endless negotiations over raw material contracts for example, negotiations can tend to prove tiresome at best. Imagine a world where negotiations wouldn't be endless, they'd be efficient, and data-driven, and enjoyable for both parties. A world where prices adjust dynamically based on market fluctuations, supply chain disrutions and other variables. This is not a distant utopia; it's commonplace: but it does take work and commitment to get it right.

Even though it’s commonplace, on many occasions it is arduous and typically inefficient. It’s usually not well automated and operationalized, being cobbled with disparate home-grown systems and Excel worksheets. That’s where automated pricing software shines as an alternative.

At Pricefx,  we know a thing or two about how to improve your sales negotiations with pricing software. We have been in the business for over a decade, helping enterprise-level customers across various industries achieve better pricing outcomes. Whether you are a manufacturer, distributor, or chemical and process business, the chances are good we have met organizations with similar pricing challenges to you.

In this article, we will look at using pricing software and its potential positive impact on your organization’s bottom line and how data-driven pricing can help your company solve both its top-of-mind pricing issues right now and future-proof your business for continued success.

However, for now, let’s open by confronting the elephant in the room straight out of the gates – is traditional deal negotiation led by human expertise already dead and buried?

The Death of Human Negotiation? Myth or Reality?

One of the most significant impacts of automated pricing is the empowerment of traditional negotiation.While it might seem counterintuitive, the data-driven sales support of a pricing software solution can potentially lead to increased efficiency, improved customer satisfaction, decreased ad hoc guesswork and greater transparency.

With automated pricing, businesses can establish clear and consistent pricing structures, reducing the need for lengthy negotiations over price points. This allows sales teams to focus on building relationship and delivering value, rather than haggling over discounts. Customers also benefit from a more transparent pricing process, fostering trust and loyalty.

The Role of Human Expertise

While automation is a powerful tool, it is essential to remember that human expertise is still invaluable. Pricing analysts and strategists play a vital role in setting pricing objectives, defining pricing rules, and interpreting the insights generated by automated systems.

The ideal scenario is a collaboration between humans and machines. Humans provide strategic direction and domain expertise, while automation handles the complex calculations and routine tasks. This partnership ensures that pricing decisions are data-driven, efficient, and aligned with overall business objectives.

Data driven decision support often comes FROM the pricing team TO the sales team, building an element of trust between those two teams where otherwise that relationship can be quite rocky. It’s common that salespeople may have 10 to 20 years tenure at a company, and they feel they know their market by gut instinct better than some analyst with a computer in the back room. Automated negotiation guidance and inline analytics are ways that the pricing analyst can put fact-based evidence in front of a salesperson showing them what margin they might be able to make.

Negotiation Guidance: A Data-Driven Tool to Boost Your Sales Team's Performance

Negotiation is a key skill for any sales team, but it can also be challenging and time-consuming. That's why next-generation native-cloud pricing software offers negotiation guidance tools that can help your team optimize their pricing strategies for each customer. For instance, Pricefx Negotiation Guidance provides real-time pricing suggestions based on data and analytics, enabling your team to apply the following 5 strategies:

1. Negotiations Aligned with Your Company Goals: Whether you want to increase your bottom line, profit margins, or other specific targets, Negotiation Guidance provides pricing suggestions that are consistent with your larger objectives. This way, you can ensure that your offers are strategically sound.
2. Customer Segmentation: By understanding the different WTP (Willingness to Pay) of various customer groups, Negotiation Guidance avoids both underpricing and overpricing for the same products. When you adjust your pricing approach to match the WTP of different segments, you can capture the most value from every customer interaction.
3. Evidence-Based Negotiation Tactics: A Negotiation Guidance system uses comprehensive internal and external data to inform your proposals and make them more credible and effective. This includes a thorough analysis that goes beyond simple historical sales data—covering the insights on product costs, industry benchmarks, and temporal changes in material costs. With this detailed data view, your team is ready to justify their pricing methods.
4. Pricing Bands: This feature gives your team a "sweet spot" for pricing, with a floor (minimum acceptable price), target (ideal price), and stretch price (maximum price point). This enables them to negotiate with confidence and flexibility. Negotiation Guidance helps your team navigate the negotiation process with clear boundaries and the ability to adapt based on the situation.
5. Transparent Pricing Presentation: Suggested prices are presented in a clear and uncomplicated way, so they can be easily integrated into your existing sales process, like when creating quotes. The clarity of the price details allows your sales force to effectively communicate the benefits to customers and speed up the completion of deals.

By using Negotiation Guidance, you can not only close more deals, but also optimize your revenue and business performance. Negotiation is not just about making a sale – it is about using data and strategic tools to achieve the best results for your business, entering the negotiation arena with confidence and data-driven insights, and seeing your revenue grow.

Data-Driven “Haggling”

The rise of automated pricing does not mean the complete eradication of negotiation. However, it fundamentally changes the landscape. Here is why it is a positive development:

• Focus on Value, Not Price: With automated pricing setting a fair, data-driven baseline, negotiations can shift to focus on the value proposition. Sales teams can highlight product features, benefits, and long-term partnerships, creating a win-win situation for both parties.
• Improved Customer Relationships: By eliminating the back-and-forth of price haggling, businesses can build stronger relationships with customers. Trust and transparency become the cornerstones of the interaction, leading to more sustainable partnerships.
• Increased Efficiency: Sales teams can spend less time negotiating and more time closing deals. Automated pricing frees up their valuable resources, allowing them to focus on building relationships and understanding customer needs.
• Data-Driven Decisions: Automated pricing provides insights that were previously unavailable. Businesses can see how pricing affects sales volume, profitability, and customer behavior. This data can then be used to inform strategic decisions across the organization.

How Else Can My Business Benefit from Automated Pricing?

Traditional pricing methods, reliant on spreadsheets, manual calculations, and gut instinct, are ill-equipped for today's fast-paced, data-driven business environment. The complexities of global supply chains, fluctuating commodity prices, and evolving customer demands render manual pricing obsolete. Automated pricing, on the other hand, offers a lifeline, replacing guesswork with data-driven precision.

By automating pricing processes, businesses can:

• Optimize list prices: Automatically adjust prices based on factors like production costs, market demand, and competitor pricing.
• Streamline dependent price lists: Ensure consistency across regions, channels, and customer segments.
• Automate rebates and discounts: Accurately calculate and process rebates, ensuring compliance and maximizing profitability.
• Define and maintain standard discounts: Easily manage customer-specific discounts and surcharges, ensuring consistency and accuracy.

A New Era of Pricing Intelligence

To wrap it all up in a tidy bow, the rise of automated pricing software does not signal the end of negotiation; it marks its evolution. Negotiation will still exist, but it will be more strategic, value-driven, and informed by data. This shift will benefit both businesses and customers, leading to a more efficient and fairer marketplace.

The Future is Automated (and Insightful)

While this article focuses on the benefits of automated pricing, it's important to remember that the human element remains crucial. Businesses must choose the right software solutions and train their teams to interpret the data and insights they generate. This combination of automation and human expertise will unlock the true power of data-driven pricing, leading to a future of sustainable growth and profitability.

Ready to embrace the future of pricing? Do some further research on the different automated pricing solutions available and explore how they can benefit your specific industry. Remember, letting go of manual pricing methods and outdated negotiation tactics is not a surrender; it's an opportunity to unlock a world of data-driven pricing intelligence and build stronger, more profitable partnerships with your customers.

To learn more about the value that a quality automated pricing software solution can add to your business, check out this handy article below:

Meanwhile, Happy Pricing!