Choosing the right pricing software can be a complex and challenging task, and using poorly defined, generic, or even recycled request for proposals isn’t the most ideal way to kick off that process.
Here at Pricefx, as a leading pricing software vendor focused on solving problems, not selling solutions, we believe that getting targeted in the RFP phase is the key to unlocking a pricing software partnership that works for your business in the long term.
In this article, we’ll examine why RFPs are used, common missteps in the RFP phase to avoid, and how to approach the process to ensure your company chooses the right pricing software vendor for its unique business problems.
What Request for Proposals (RFPs) Are and Why They’re Popular
A Request for Proposal (RFP) is a document used in the procurement process to formally request goods or services, with the goal of evaluating multiple vendors for selection.
Since its widespread adoption in the 1960s thanks to systems like fax and expedited mail, the RFP has become a popular tool among governmental organizations and private companies when initiating projects, as it provides a streamlined means of comparing several vendors at once.
When weighing pricing software options, buyers typically use RFPs because they are either –
1) buying pricing software for the first time and require a tried-and-tested procurement process
2) subject to internal business processes that require the use of an RFP for specific conditions or deal sizes
3) using external consultants to facilitate the buying process who advocate for a standardized approach
Whatever the motivation for using request for proposals, it’s important to recognize that the RFP is simply a procurement tool and not a guarantee for success. How you leverage it will determine the quality of your purchasing decisions, a topic we’ll get into now.
Common Missteps in RFPs for Pricing Software
Although the RFP is one of the most decisive building blocks of any project, in the complex world of pricing software, it’s often easier to get wrong than right. Here are some of the most common missteps buyers make in the RFP process and why they are not conducive to your company’s long-term success.
Focusing on Features, Not Problems
In pricing software procurement, privileging features over problems or use cases in RFPs becomes an issue once every pricing software vendor claims to have all the features you need. How, then, does your company discern the best choice among them?
When entering a multi-year partnership, you’ll need more to define that relationship beyond whether the provider can make a price waterfall chart. Listing out 20 pricing problems in an RFP leads to better buying decisions than creating an exhaustive list of 300 features and functions.
Taking a Cookie-Cutter Approach
To accelerate the procurement process, some companies take to recycling old RFP templates (irrespective of the industry or business challenge) without customizing the requirements to reflect their unique pricing needs.
Consequently, the document lacks the specificity potential pricing vendors need to provide tailored solutions that target the company’s specific pricing pain points.
In addition, businesses tend to write their RFP with a request to duplicate their old processes and features. This can result in missed opportunities to seek improvements from new pricing software, rendering the process less effective. Shifting focus in the RFP to business problems, not processes, will lend itself better to innovation and growth.
Having an Unrealistic Turnaround
In the RFP phase, the time required for buyers and vendors to iron out project requirements can be significantly underestimated, resulting in a rushed decision-making process and suboptimal outcomes in implementation.
Businesses eager to jumpstart their pricing projects should recognize that the buying process for pricing software involves complexities that demand adequate time to be assessed by pricing vendors to ensure the partnership makes sense.
How to Approach Request for Proposals for Successful Outcomes
When writing a request for proposal for pricing software, it’s important to take a holistic approach beyond the latest pricing widgets available on the market today (of which there are many) and focus on identifying the core problems your business needs to solve for their sustainable success.
While most pricing vendors out there can deliver on any number of features and functions, whether their product truly aligns with your business goals is much more variable – and telling.
To supplement the RFP process, consider meeting with a vendor expert and jumping straight into use cases to uncover the common pricing challenges their product addresses. Industry catalogues are invaluable resources to guide these conversations, as they are tailor-made to identify and define the key challenges the software is designed to solve across sectors.
Ultimately, big picture questions like, “Is the software flexible enough to evolve with my business?” “Is the company easy to work with?” “Do they care about my needs?” will help your company get a taste of what it would be like to work with the vendor in the long term.
Next Steps: Choosing the Right Pricing Software
In the world of pricing software, most of the language you’ll encounter, from product marketing to sales, is about solutions. And granted, any software product should offer solutions by design.
The better question your company should be asking in those initial conversations is, solutions to which problems, and more importantly, do those problems align with mine? Once you have a handle on that, you’ll be well on your way to making better purchasing decisions that support a long-lasting and mutually gratifying software partnership. And RFPs are the right place to start.
In this article, we chose to focus on optimizing the RFP process so that companies have the right strategies in place in the beginning to ensure that the pricing software vendor they choose is the right one – whether that be Pricefx or any of our peers.
To discover more questions companies should ask themselves when weighing their pricing software vendor options, consider checking out our article below.
Iain Lewis has worked in pricing as a practitioner for 27 years working at Automotive, industrial goods, business services and Distribution companies. Iain brings his unique perspective to each engagement to guide companies through complex buying decisions and has helped companies throughout Europe and South-East Asia continue to improve their pricing approach.