Pricing Management Development: What Are the Best Practices?

Imagine this scenario: You’re a marketing director for a car spare parts manufacturer known for its quality and sourcing any part for your clients with quick turnaround and delivery. For years, you have followed a traditional pricing approach, setting fixed prices for each product with a standard 20% profit margin without considering the ever-changing dynamic market conditions and your ever-increasing delivery costs due to an increase of online shoppers in new markets. However, you are now noticing that your competitors are gaining an edge by adopting dynamic pricing strategies. It is time to explore the realm of pricing management development processes and uncover the best practices that will revolutionize your business. Say goodbye to outdated pricing methods and embrace a new era of profitability and customer satisfaction. Get ready to unlock the secrets of effective pricing management. 

With more than 20 years of combined excellence in the pricing industry, Pricefx and Bloomkeys team up here to examine the best practices for a developing a defined, consistent, and data-driven pricing management development process. As pricing software vendor and partner, we believe it is important that our customers are armed with as many resources as possible to succeed in every phase of the pricing project lifecycle and set themselves up to be as prosperous as possible. 

In this article, we will explore a wide range of topics to help you navigate the complex world of pricing strategies effectively. More specifically, we will explain how an experienced pricing software strategy and implementation partner can help you develop and implement an effective pricing management process and advise you on the specific tools or technologies to get the job done. 

5 Common Challenges in Starting a Pricing Management Process & How to Overcome Them 

In general, there are 5 major obstacles or challenges that most business will need to confront and deal with directly, openly, and honestly in setting up a lasting pricing management transformation process; 

1. Organizational Alignment 

• Full alignment between stakeholders and functions is crucial, especially in large corporations with multiple countries and business units. 
• Resource allocation and collaboration among functions are key factors for successful implementation. 

2. Data and Data Quality 

• Lack of data and poor data quality pose significant challenges in setting up the pricing process. 

3. Complexity and Management 

• Pricing can be a complex process and companies may struggle to find a simple and effective way to manage it. Usually, the challenge is to find the right trade-offs between comprehensiveness and complexity 

4. Existing System Limitations 

• Many companies encounter obstacles due to limitations in their current systems. 

5. Change Management 

• Resistance to change from employees can hinder the adoption of a new pricing process. 

How to Overcome These Challenges 

Make sure pricing becomes a hot topic in your organization and:

• Ensure executive sponsorship and allocate proper resources and empower the project leadership team.  
• Establish a data task force to conduct data audits, implement data governance, and improve data collection and management.  
• Adopt a progressive & prioritized approach, do not look to address everything at once. 
• Explore the option of investing in new tools that can support the pricing management process and overcome system limitations.  
• Invest in change management and develop the pricing culture across different functions and management levels. 

How an Experienced Pricing Software Partner Can Help You Implement Price Management & Recommend the Rights Tools for the Job 

Now you know what the issues are and what you will need to think about to bring implement long-term change into effect, consider enlisting the help of a quality pricing software strategy and implementation partner to get the pricing management plan enabled. 

An experienced pricing software partner can provide valuable assistance in implementing price management and recommending the right tools for the job. They can guide the customer through various stages depending on their needs.  

Firstly, the partner can help analyze and interpret data, enabling the company to gain insights and develop a robust pricing strategy aligned with their business goals. This may involve pricing segmentation and value-based pricing strategies.

Another important aspect is process design implementation, where the partner works closely with the company to design workflows, define roles and responsibilities, establish pricing policies and guidelines, and select the appropriate tools from the market.

Choosing the right pricing software is crucial for a sustainable pricing management process.

Additionally, companies may benefit from investing in price scraping tools for B2C and B2B markets, particularly when extracting pricing data from the internet. 

For companies with complex product data structures, product data management tools can be useful.

Once the project is completed, the pricing software partner continues to support the company with change management efforts, including training, highlighting the benefits of the implemented solution, and providing ongoing communication and employee support. They also assist in monitoring and optimizing the pricing strategy by reviewing and analyzing outcomes and results.  

Can Your Pricing Management Transform Over Time? 

The short answer to that is, ‘yes.’ The longer answer is ‘yes, it must.’  

Pricing is not a ‘set-and-forget’. 

To ensure the long-term effectiveness of its pricing management process, companies should focus on key areas.  

Firstly, maintaining data quality is crucial. Regularly reviewing and updating input data such as customer segmentation, product segmentation, market trends, competition information, and product details ensures the accuracy and relevance of pricing decisions.  

Secondly, tracking pricing performance through key performance indicators (KPIs) like Win/Loss, alignment vs price/discount recommendation, customer churn etc. provides insights into the effectiveness of pricing strategies over time. It allows companies to assess the impact of their pricing management process and make necessary adjustments. 

Effective communication with stakeholders is the third, but vital aspect. Establishing clear and consistent communication channels between pricing, sales, and marketing teams helps ensure that everyone understands the reasons behind price changes and can communicate opportunities and changes effectively. Moreover, pricing governance plays a significant role in maintaining a robust pricing management process. By defining roles and responsibilities and ensuring the right people are in place, companies can ensure consistency and continuity even as personnel change or evolve within the organization. 

Lastly, companies should continuously test and refine their pricing strategies. By regularly evaluating and analyzing the outcomes of pricing decisions, companies can identify areas for improvement and make necessary adjustments to optimize their pricing approach.   

This iterative process allows companies to adapt to changing market conditions and ensure their pricing management process remains effective over time.

An Anonymous Example of Successful Pricing Management Process Implementation 

Recently, we had the opportunity to work with a wholesaler on a successful pricing management process implementation. I can share three key factors that contributed to their success; 

The Presence of Executive Sponsors 

Having senior executives who understood the importance of the project and allocated the necessary resources with the right skill sets. These sponsors set clear project objectives and ensure alignment among stakeholders from finance, sales, marketing, pricing, and other departments. In this case, the CEO himself was actively involved in the project, providing guidance through a steering committee. 

Fostering a Data-Driven Approach 

A data-driven approach forms the foundation for effective pricing management.  

A robust data collection process, along with regular audits and reviews, ensured the quality of data used in the pricing management process. This emphasis on data integrity and analysis enabled the company to make informed pricing decisions. 

Effective Change Management 

Communication about the project started from the beginning, involving people and stakeholders throughout the process. By engaging individuals early on and allowing them to contribute their insights and perspectives, the company fostered a culture of collaboration and prepared its employees for working in new ways.  

This inclusive approach helped ensure that the pricing management process incorporated all necessary phases and addressed specific business needs. Effective change management was essential in driving the success of the project.

When Can I Begin to See the Results of Pricing Management & How Can I Measure the ROI?  

The timeframe for seeing results from pricing management depends on a company’s current stage of what we like to call ‘pricing maturity.’ For those businesses just beginning their pricing journey and thinking about structuring their pricing approach, tangible results may take time to materialize in this early stage, usually from 6 to 12 months. 

However, there is no universal answer to when tangible results can be expected, as it depends on factors such as project scope and business context.

Return on investment in pricing management can be estimated by considering various techniques applicable to different industries. Estimations may involve factors like the speed of price updates, the capture of pricing opportunities. 

Choosing the Right Pricing Software Partner is The Key to Your Pricing Management Success  

Of course, as we mentioned above, selecting the right pricing software will be key to your organization achieving your overarching business goals.  

The key is to find a partner who can only provide pricing software configuration but also possess the necessary skills to deeply understand your business & that can assist in framing and challenging pricing strategies & designing the solution accordingly. 

Choosing a partner that combines expertise in both areas maximizes your chances to achieve a successful and sustainable pricing management process implementation. 

If you are a company looking for pricing software with a strong strategy partner partnership focus across a range of industries and specialty areas of expertise, then you will want to learn more about the Pricefx Advantage Partner Network and Bloomkeys, one of the key partners.  

On the other hand, if you are still unsure about working with partners and would like to learn more, check out the handy article “The Benefits of Working with a Software Partner.” 

Happy Pricing!