The 3 Worst Ways To Choose Pricing Software
January 13th, 2023 (Updated 03/09/2023) | 10 min. read
By Iain Lewis
Choosing pricing software for your business is hard. It is a difficult skill because relatively few companies have done it before. As every company is completely and utterly different in what it requires from its pricing software, there is no set way to get it right, and a range of ways to get it wrong. For example, if you are looking to make improvements to your current pricing regime, that’s great. However, if you are sending hundreds of pricing requirements to a pricing software vendor based on the range of current problems and issues you are experiencing with your current pricing technology, (rather than going in with a fresh set of eyes), you might be setting yourself up for failure. With that in mind, in this article, we will address the 3 worst ways to choose pricing software and how to avoid making bad pricing software decisions.
At Pricefx, we have spent the last decade assisting customers to track price moves and trends in real time. Through those broad experiences, we have developed technological solutions that can assist in giving all today’s modern business organizations access to the kind of innovative tools they require to make their pricing a ‘scalpel-like’ precision tool for driving profit and increased business efficiencies. On the other hand, if we are not what you are looking for in your pricing software, don’t worry, we will let you know. When choosing your pricing software, we believe as strongly as you do that you should not settle for second best in what suits your business. It is not about setting a pricing ‘set-and-forget’, it is about building a long-term pricing partnership together that evolves over time.
Let’s jump immediately into the deep end and learn the 3 worst methods in choosing your organization’s pricing software before we close with the best ways to avoid falling into the trap of making poor pricing technology decisions.
Pricing is Serious – it’s Easy to Get it Wrong
Choosing the right pricing software suite for your company is no small feat and any company that takes on the choice lightly does so at their peril. Leaders need to be well-informed on the needs of the organization, the capabilities of the pricing software provider, and the company budget to find a provider that meets their expectations and suits what they are trying to achieve.
While there are common best practices that can be used to guide decision-making, even with the best guidance, mistakes can still be made.
Here are the top 3 worst ways to choose a pricing software vendor:
- If your Pricing System is Broken; Don’t Replicate Your Current Mistakes
- Say “Just Give Me a Pricing Software Demo”
- Run the Pricing Software Project Without Executive Engagement or Awareness
1. If Your Pricing System is Broken; Don’t Replicate Your Current Mistakes
If you are contacting a pricing software vendor to cure your current pricing ills, the chances are you are looking for a better and more effective way to price your goods and services.
However, if you only want to use pricing software to address your current problems – updating your price lists ASAP in Excel and carrying over data from one column to another, then there is truly little point in providing that information to a pricing software provider.
With a third-party pricing software tool such as Pricefx, you are not going to be focusing on things like spending weeks extracting and cleaning data, going through it, and reviewing it, updating the latest Excel workbooks, and emailing the information through to the price list update team. With pricing software, that is all done automatically. It simply does not apply.
A modern Next-Gen pricing tool works in quite a different way from most existing pricing tools (which might be Excel, your own in-house legacy pricing system or perhaps even First-Gen pricing software).
To ask the right questions, you will need to think differently.
Instead of considering solutions to the problems of the ‘same-old-same-old’ legacy first-gen or in-house pricing system that you currently operate, try something different. Go out and do some market research about the pricing software vendors that you are considering and how they can make permanent and lasting changes to your current set up. Investigate how modern pricing software solutions are overcoming pricing challenges and the evolving business which companies like yours are currently facing and how they are solving them.
Most pricing software companies have marketing material (case studies for example) which discuss customers solving a particular problem such as high-cost volatility, margin protection or other complexities around the pricing process. Learn what your peers and companies like yours are challenged with by pricing and reflect on your company’s own current business questions.
Consider asking yourself the question; “How can I serve my customers better?”, and work towards putting in place the systems that will allow for it to happen.
The resulting change in basic assumptions to move forward rather than remain static means that you will not be focusing on your pricing limitations, but instead reaching for the stars in what you can achieve with your pricing in the pursuit of your organization’s unique set of business goals.
You might not end up with pricing software that can perfectly perform exactly every single function that you desire. However, if your business has a truly unclouded vision, then it will be easier for you to choose pricing software that aligns with your vision rather than pigeonholing or limiting yourself.
Open yourself to the possibilities of the future rather than remaining tied to the pricing limitations of the past.
2. Say “Just Give Me a Pricing Software Demo”
Ouch! Those 6 words, “just give me a pricing software demo” are pricing software implementation suicide, but why do we consider it so?
Remember, pricing software can be really, really complex.
If you ask 100 companies how they do pricing, you will probably get 150 answers as even some parts of the same company will do their pricing differently.
But what does that mean exactly?
Long story short, everyone executes their pricing differently, has their data stored differently and has their unique reviews, oversights, and workflow approvals.
So, just asking for a standardized demo is not going to cut it for your business.
Instead, have a 45–60-minute discovery call with your potential pricing software to personalize what your company needs from your demo. A good demo can help your organization to really understand if the software choice will meet your business needs both now and into the future as your requirements change.
It is important to work together with your potential software provider so that they can understand your needs and challenges.
The discovery call gives you the opportunity to underline what is really important for you so that the pricing software vendor can focus on the right things to do FOR YOU.
It’s worthwhile to remember that most pricing software solutions are incredibly broad and rich in capability and complexity. Unless you narrow down what you need from your demo, it is totally conceivable that your pricing software specialist could talk for 3 hours and still not touch on nor address your company’s major concerns unless you make them specifically known.
Does your potential pricing software know exactly what your company’s needs are, and are they achievable?
For example, we recently dialed in for a discovery call with a retail industry customer and began explaining the retail capability and functions of the Pricefx system.
However, some time into the call, our potential customer explained that they already had pricing software and that they were looking into potentially adding on a price optimization function that was incompatible with their current pricing set-up.
Before contacting a pricing software vendor for a demo, ensure they know precisely what your organization is looking to achieve.
Different sections or departments of your company may also have totally different requirements from a pricing software solution.
Consequently, taking the time to highlight to your internal people who will be involved in the decision and relaying their requirements to the pricing vendor in your discovery call will be critical to making the right pricing software decision or not.
3. Run the Pricing Software Project Without Executive Engagement or Awareness
Finally, the last sure-fire to turn your pricing software decision-making into disaster is to go ahead independent of executive level engagement or awareness that you are considering changing or adopting a pricing software solution.
If you are an executive in a business, and you have identified that you need to up your pricing capabilities and you are looking at third-party pricing software to do it, become involved in the process. In the first instance at least, don’t delegate it out, your company needs to consider the potential change a key strategic business initiative.
Of course, your executive-level decision makers do not need to be involved in every single meeting but they should remain engaged and updated throughout the decision-making and implementation process. The buy-in decision needs to be driven by them, which means they will need to retain a good level of involvement in what unfolds and awareness of which problems it’s going to solve and how.
Don’t leave the decision-making to your Pricing Manager to escalate the pricing software adoption idea to your C-level executives.
In our 10+ years of experience, that approach has extraordinary levels of failure.
As there is no other software which delivers the same Return-on-Investment (ROI) as pricing software, choosing and implementing it should be a strategic decision coming from the very top of your business.
What Can You Do Instead of Making Bad Decisions?
Now you know the worst ways to choose pricing software, consider ways to make better decisions like:
- Think about the art of the possible in overcoming your business problems, don’t focus on how you currently do, or did your pricing in the past!
- Consider how to quantify your pricing problems with everyday straightforward business case metrics – For example – What impact would changing your list prices in 2 hours rather than 2 months have on your company’s ability to plug margin leakage gaps? What savings could you make and what would be the difference between the two numbers to your company’s overall profit bottom line.
- Don’t be afraid to work closely with your chosen pricing software vendor – They know it is hard, but the good news is that they have done all of this before and know how to deal with all manner of possible issues that may arise. Chances are, they may have already seen your potential problem in the past and already have a solution in place.
- Don’t treat your pricing software vendor as a combatant – Your pricing software provider wants you to succeed as much as you do with your pricing project. Trust and cooperation breeds success for all parties across long and prosperous business partnerships. Use your pricing software vendor’s experience to bring the information to light on the unique questions you want answered.
- Above all and sorry for the repetition, remember, buying pricing software is a really difficult thing to do, but the benefits can be enormous.
If you are interested in learning more about why you need pricing software like the award-winning Pricefx pricing solution and how to build a business case for purchasing the innovative software to help your organization fortify its bottom-line profit, check out this handy article below: