As painful as it is for pricing solution vendors like us to admit, using pricing software may not be for everyone. If you do not yet have the digital maturity to add pricing software to your tech stack mix, if your pricing needs are likely to stay at the “cost-plus” level, or if you do not fully understand the benefits and costs of a total pricing software solution, then it might not be for you (yet). If you fall into the latter category, you will want to know precisely what the cost is of doing nothing at all in terms of implementing pricing software for your business.
That’s precisely why we have prepared this article on ‘The Cost of Inertia (Not Using Pricing Software)’ for companies just like yours to see what you are potentially missing out on, and we will also supply an easy-to-understand metric of the ramifications of deciding to pass on pricing software (for now).
At Pricefx, we have over a dozen years of experience helping our customers to understand the payback they can get from pricing software so that they can track the success of their investment and go forward to get support for the purchase.
There are several KPIs (Key Performance Indicators) that pricing improvement projects can move, such as win rates, resources needed to carry out processes, deal cycle times, etc.
However, as important as those numbers and metrics are, in this article we will not be touching on those in depth.
We will simply examine what choosing to do nothing at all with implementing pricing software will cost your business.
Setting The Current Cost Landscape
At the time of writing, it is fair to say that the current economic outlook has seen better days. The word “recession” is at the tip of tongues of CEOs, C-Level business leaders, Pricing Managers and it’s even filtering through to your organization’s salespeople. It feels like we are in a stasis of “will it be a recession or won’t it”? Opinion is split between those who believe a recession is unavoidable, other business leaders who believe that we can evade the doom and gloom, and finally those who feel that the outcome could still fall on either side of the fence.
Understanding that no one knows for sure what could eventuate, it might pay to be prepared. Recession or not, economic experts agree that things could be tight for a little while, cost-cutting may become the norm for a while and as such, your company’s employees’ jobs might be at risk.
Every business executive, just like you, hates to lay people off.
Through the prism of how much a pricing software solution can add to the profit maximization of your organization, let’s see how much not usingpricing software is currently costing your company, and how many jobs you can save for your peopleif you choose to use it.
How Many Jobs Can Your Business Save with Pricing Software?
Executives know that one of the first things they need to do when business starts dropping off in a recessionary or inflationary period is to begin to lay off employees until things get better.
But what if your business had a way to save those full-time employee positions, extend your manufacturing plant capacity, supply capital for other technology that will drive your company’s research and development projects, or whatever it is that your company’s unique set of business objectives dictate?
Let’s look at the numbers and drill down specifically into the number of positions your business might be able to save when the predicted rough economic times come.
The Job Numbers
Imagine you are an enterprise business with an annual revenue of $4 billion.
With the use of a pricing software solution, if your company achieves the annual average profit improvement after the technology’s adoption of 2.1%*, your yearly profit improvement will be $84 million.
That’s some serious cash to save jobs.
Let’s break it down even further and look at what would happen if you didn’t have pricing software and your company missed out on that extra $84 million in profit.
By not adopting pricing software, your company could:
Miss out on $7 million in monthly profit!
That’s $233 333.33 in profit your business is missing out on per day.
Or $9722.22 profit lost per hour.
Or $162.04 profit lost per minute.
Let that thought sink in.
*Data compiled from Pricefx pricing software users across 10+ industries and more than 100 companies, using the Pricefx Plasma benchmarking solution.Learn more about Pricefx Plasma here.
Okay, so how many full-time employees’ jobs with an average salary of $80 000 could you save by using pricing software?
If your company uses a pricing software solution, you could save 4 jobs a day over a year.
In other words, your business can save a total of 1050 full-time employees’ jobs for the year!
Now imagine your $4 billion annual revenue business is better and more efficient than most. Your company is in the top quartile of organizations in terms of profit improvement (4.7%*) after adopting pricing software.
Let’s check out those numbers:
– Yearly Profit Improvement – $188 million
By not adopting pricing software, your company could:
Miss out on $15.67 million in monthly profit!
That’s $515 068.49 in profit your business is missing out on per day.
Or $21 461.19 profit loss per hour.
Or $357.69 profit loss per minute.
– With a pricing software solution, your business could save 6 full-time jobs (with an average salary of $80 000) per day.
– That’s 2350 of your full-time people’s jobs saved over a year!
*Data compiled from Pricefx pricing software users across 10+ industries and more than 100 companies, using the Pricefx Plasma benchmarking solution. Learn more about Pricefx Plasma here.
It’s a shocking set of numbers, but it’s not all about the hard-hitting metrics.
There are also a range of other ‘costs’ that your company could be missing out on by failing to implement a pricing software solution.
Don’t trust us? Run the numbers yourself. Click below for our free margin calculator:
And be sure to keep your eyes peeled for our upcoming sister article on ‘What Else Am I Missing Out on By Not Using Pricing Software?’
Yes, it’s a Shock – BUT How Much Does Next Gen Pricing Software Cost to Fix it?
Pricing is hard and pricing is complicated.
Getting it right requires a little push in the right direction from technology.
Now you know that the basic question you need to ask yourself (rather than ‘can I afford pricing software?’) – Can your company afford NOT to use a pricing software solution?
Naturally, you still want to know what the bottom line is and if your business can afford the upfront outlay.
At PriceFx, we have first-hand knowledge of how impactful pricing software can be in assisting companies achieve their unique set of business objectives. On the other hand, we also are aware that the initial outlay is also critical to the decision-making process.
To help you decide, check out this handy article on the expenses involved:
However, if you have already done the math and are looking to invest in a pricing technology solution, talk to one of our pricing experts today to get you on your way:
Gabriel Smith is the Chief Evangelist at Pricefx. He has 20 years experience in CPQ, enterprise software, SaaS, with particular expertise in lead to order, pricing, incentives, product management and solution sales. He has worked with market leading companies like 3M, Anda, Avery Dennison, Cisco, CertainTeed, Cox, IBM, Seagate, and Sonoco to improve their profit and processes through digital transformation of their pricing and CPQ processes and using AI to optimize pricing. He is a father of 2, attended UC Berkeley and lives in San Francisco.