To maximize your profits and stay ahead of your competitors, you’ll need to be able to price your products at the absolute optimum level. If not, trying to hit the pricing targets that will assist you in achieving your organization’s business objectives will be like trying to throw darts at a moving dartboard. Sure, by sticking with your Excel or Tableau pricing system, your well-worn first-gen on-premises pricing software or even your customized in-house pricing set-up, you might hit the moving targets occasionally, but it will be more like guesswork than hard-nosed science. To overcome the obstacles of hitting moving and undefined targets, what your business will require is an accurate price management system. But how do you know that it will fit your business objectives specifically? Believe it or not, pricing management software might not suit every business type. That’s why we’ve put together this blog article to discuss; ‘Is Pricing Management Software Right for Me?’
At Pricefx, as one of the world’s leading pricing software vendors, we have assisted hundreds of businesses over the last decade in customizing the type of technological solutions they require for pricing in their unique business.
So, to get the ball rolling, let’s first analyze exactly what pricing management software is and what it does before we move on to discussing its benefits and drill down to who it is right for and who may not need it at all.
What Is Pricing Management Software and How Does it Work?
Things change so fast these days, and this is what price management software is all about allowing you to do for your organization – to manage all your pricing data safely and speedily, allowing you to focus on what matters most to your business, maximizing those profits. But how does it do that?
It’s all about number one, data – and number two – knowing your business objectives well to get the most out of your data.
With price management software, the fundamental three data pieces that you’re going to find essential for a start with price management is knowing everything about your products – your product data.
You will also need to know your customers well – through your customer data.
And of course, you will be keeping track of sales – through your sales and transactional data. This is the final piece of the data puzzle you need to complete pricing management data jigsaw.
This is the core foundational data set that you are going to use for your pricing decisions. In addition to that, you’re going to bring in other pricing relevant data sets like competitive data or market statistics. On top of all that data, your pricing management software will allow you to layer in business logic. In other words, in addition to having access to a mass of data, it is about being able to execute your business strategies. In any one organization, you can have a myriad of different pricing strategies, depending on what scope of the business you’re dealing with or what product lines you’re working with. Ultimately, it is the combination of data and business logic working together that drives price management software to meet your organization’s predefined endgame.
What a lot of our customers are confused with is perhaps wishing or hoping that pricing management software is a magical pricing cure all akin to pricing witchcraft or soothsaying to always tell them the right answer to price their products. But’s that’s not what pricing management software is.
Pricing management software is not about telling you exactly what you have to do with your prices or the software telling you what the right pricing answer is. It is really all about giving you a workspace or a platform for you to operationalize your company’s own pricing strategies.
How Can I Use Pricing Management Software in MY Business? – A Use Case Example
Consider the following real-life scenario of one of Pricefx’s large enterprise business clients with customers all over the globe. Prior to establishing a price management software system, our client, a well-known global drinks manufacturer, set their prices at their head office without a lot of input from their regional offices.
Now, with the introduction of price management software, the company is using the technology to provide price guidance to their regional offices so that those branches can be free of the head office constraints and set prices that more accurately reflect or respond to local area markets.
The result? Of course, Head Office still sets a global list price for their drinks, but local areas in disparate regions of the globe like India, Brazil, Australia, or South Africa are able the factor in market forces in their countries and factor those differentiations off their global list price.
What that means is that for regional markets for this business, is that they can potentially become more profitable as the constraints of global list drinks pricing is done way with the inherent flexibility of pricing management software to localize their pricing.
You too can use that sort of flexible pricing logic powered by price management software across your catalogues of products, regions, countries, channels, and customers ensuring that the price will always be right, regardless of the context.
The 3 Main Benefits of Pricing Management Software
1. Automation + Real Time Accurate Pricing
The automation that pricing management software allows for business to deal with individual pricing exceptions and constraints as required, rather than attempting to deal with an entire bucket of exceptions at any one time. In other words, automation allows you to save a lot of time, and drill down specifically into the pain points of your company’s pricing strategy that require special attention.
You can improve the accuracy of your organization’s pricing by concentrating only on the changes you need, rather than exposing your entire data set to the potential pitfalls and errors that can go wrong in Excel.
With pricing management software, there is no need to spend days and weeks on pricing administration. Changes to your pricing rules can be made in minutes. The increased accuracy will provide clear visibility of where you are losing margin because items are priced too low, or where you are losing revenue because items are priced too high. Pricing management software will accurately point you towards your pricing ‘sweet spot’ and in real time.
Pricing, like any crucial part of your business, is not set in stone and shifts over time. It evolves as your organization and industry evolve. With that being the case, the need for all who use your pricing system to have access to the information and know how it was generated is critical.
Many business organizations are moving from antiquated IBM AS/400 systems or Microsoft Excel spreadsheets that only a few people in the company know or have access to.
Pricing management software allows your organization to take that siloed pricing intelligence and move it into a system that has longevity and applies that business intelligence across your systems automatically.
Switch to pricing software, so the next time Jim in the Pricing Department goes on holidays to hike in the Yukon and locks up his exclusive access to your Excel price lists, you won’t be hamstrung in adjusting your prices.
3. Attract and Keep Talented Pricing Professionals
There is possibly not an employee in your company who doesn’t want to work smarter, not harder, and your pricing professionals will be no different.
Impress on your new hires and existing staff that pricing management software will empower them to head home from work each day in a more relaxed frame of mind. A happy worker is more likely to be a productive one.
By minimizing manual calculations and inputs, the automation of tasks with price management software can boost the productivity and overall work-life balance of your pricing team.
Think of pricing management software as a tool to assist in turning around the so-called ‘Great Resignation.’
Who Is Pricing Management Software Right For?
Most types of business will benefit with the use of price management software. Small to medium-size business may have a lower number of users making actual use of the price management software, while large enterprise-size businesses may have a larger number of users, but each have will be able to derive benefit and value from the technology.
However, there are some business model exceptions that may not benefit with the use of price management software. See below.
Who Is Pricing Management Software NOT Right For?
Specifically, pricing management software may be of little value to service companies, or companies that basically don’t produce physical products, or don’t have very many products.
Long story short, if your company does not produce many products and/or there is little differentiation in either the price or the regions you operate in, the less effective or necessary pricing management software may be for you and your business.
How Does the Pricefx Pricing Management Software Model Differ?
The Pricefx adaptation of the pricing management software model is unique due to the customized configurability of the data model.
What that means is that users of the software are allowed and encouraged to ‘own’ their pricing management software system and design it and implement it to according to their own unique set of business circumstances and program it to meet their specifically exclusive business demands and required outcomes.
As the pricing management software is designed ‘from the customer’s needs up,’ rather than prescriptively from ‘the pricing vendor down,’ inherent flexibility is built into the Pricefx system.
The data used in the software will come from you, the customer. Utilizing this form of ‘data-first’ design, your data is collated, ingested, and creates your pricing model quickly.
New pricing ideas, strategies and business requirements can therefore be implemented at great speed (keeping up with today’s lightning-like business environment), and business visions are possible to be transformed on the fly.
That’s Great – But I Need More Than Pricing Management Software – Right?
Now you know what pricing management software is, what it does, its benefits, who it is for, and who it’s not for and how it works here at Pricefx.
You possibly already have an idea if the innovative technology is something that can potentially benefit your business. However, you might have correctly identified that you may need more than simply a pricing management software solution. Perhaps pricing analytics and price optimization software are also on your radar?
At Pricefx, we have a 360-degree pricing software solution that could potentially meet your company’s specific needs.
To check out the advantages of a fully automated price optimization AND price management solution, see our recent blog article to learn more below, and happy pricing!