The Ultimate Guide to Price Management Software
December 22nd, 2022 (Updated 03/09/2023) | 9 min. read
By Iain Lewis
It is quite possible that you have several pricing spreadsheets and price lists filled with formulas with info gathered ad-hoc from your ERP (Enterprise Resource Planning) and/or you are crunching those numbers manually. If that is the case, and you have a growing business you are probably looking to get out of these error-prone and time-consuming pricing procedures, not to mention get more strategic with your price management. If that rings a bell for you and your organization, the time may have arrived to consider a price management software solution for your business. So, join us in this article as provide in-depth analysis of the innovative technology in this ‘Ultimate Guide to Price Management Software’ article.
At Pricefx, as one of the world’s leading pricing management software vendors, we have assisted hundreds of organizations over the last 10+ years in customizing the type of technological pricing solutions they require for successfully meeting their own set of unique business objectives.
Without further ado, let’s dive straight into an analysis of what pricing management software is and does. We will close with who it is for and who it is not for, and check which are the best price management software solutions available in the in the marketplace today.
What Price Management Software Is & What it Does
In business, things change so fast these days, and price management software is all about allowing you 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 is all about number one, data – and number two – knowing your business objectives well to get the most out of your data.
Informed by your customer, product and sales data, price management software technology helps you to price consistently, in an automated fashion, thereby making your prices more relevant to your customers which drives top-line and bottom-line growth for your business.
Price management software technology manages your pricing via two major methods
- Internal Price Management
- External Price Management (Against your competitors)
Internal Price Management
Robust price management software enables your organization’s suite of pricing tools and processes to continually improve and develop pr
icing knowledge at a global level across your business and supply the transparency to tap into that knowledge daily.
Use the technology to finally say goodbye to the internal pricing processes (like manual price list updating and other manual processes) that have been slowing you down and delaying your progress to become more pricing efficient.
Price management software helps you stay pricing consistent across your entire product range, at any level of granularity. Within a specific product range, pricing management software supplies smart price insights into how your products should be positioned in price, one versus another internally, and it can edit those prices over time (in real time) as conditions change without making manual errors.
External Price Management (Against your Competition)
Regardless of what you sell, or if you are involved inB2B or B2C selling, taking account the prices of your competitors, and tracking them as they evolve in real time can be a crucial weapon to have in your pricing arsenal. Automated price management software can take away the pain, errors, and frightful manual labor of Excel spreadsheet updates to position your products competitively and simultaneously align with your company’s unique set of business objectives.
In an increasingly packed and competitive marketplace, customers have a host of options to choose from, particularly now that most products are available online (even in the B2B environment, more companies are turning to doing business online just like their B2C brothers have been doing for a while now) – see the article directly below for more information).
Use the technology to assess your pricing strategy and if you want to be a price leader based on value, or a price follower using a limited competitive pricing strategy.
For example, if your business and one of your competitors share comparable products at a similar quality available across a wide range of price ranges, people might easily dump your brand because a lower-priced alternative is easily available with your competitor.
Companies using price management technology can adjust/align the prices of their products or services automatically against their competitors or on your customer’s perceived value of your offering—how much it is worth to them.
On the hand, companies without the resources of a pricing management software solution are bound to ‘follow the leader’ as they may not have the budget or resources to carry out regular or automated technology-driven price audits, realignments, and updates.
How Price Management Software Works
To maximize your profits and keep several steps ahead of your competitors, pricing your products at the absolute optimum level will go a long way towards achieving those two goals.
If you are not, attempting to price at the levels that will help you to successfully achieve your organization’s customized set of business objectives will be like throwing darts blindfolded.
If you choose not to use a price management software solution, tracking a goal to work towards will be a challenge and even once you have managed to define it, real-time pricing guidance will not be available to reset the price levels required for your company to get there.
On the flip side, using a price management software solution will add transparency and data-informed ideas to where you are heading and how to adjust by:
- Maintaining Price List Consistency & Avoiding Pricing Discrepancies – Without a modern price management software system, it is hard to keep those price lists current and error-free. Automate your price lists updates in minutes rather than months and maintain your margins rather than leak them as manual updates cannot keep track of the rate of change in your costs. Excel is also incapable of supporting quick decision making. You could possibly miss out on a sale because of the time it takes to get the best price to your customers.
- Considering All Your Pricing Conditions – Using an automated pricing software solution, you will be able to consider numerous conditions into your pricing simultaneously, such as:
- Demand for product class, product, and brand
- Newness of the product: including its stage in the product life cycle
- Sole product vs a complete product line
- Cost of producing and marketing products
- Cost of changing prices and time periods that they apply
- Types of competitive markets
- Your competitors’ prices
- Managing Relationships Between Your Different Product Families – If your business has entry-level products, mid-level products and premium-priced products, you can use price management software to manage the price relationship between differentiations in your ‘product family’ to avoid cannibalizing your brand and creating customer confusion.
How the Volkswagen Automotive Group differentiates between prices between Skoda as their entry-level product, VW as the mid-level product and Audi as their premium-priced product is a fitting example of managing price relationships between your product families.
- Define Your Pricing Strategy at Any Granular Level – Using price management software, you will consistently make better, and more accurate pricing decisions if they are supported by the data you are feeding into your pricing software (at any level of granularity that you require insights into). Analyze your organization’s historical data on how your prices have changed, why they have changed, and how your customers have reacted. Price management software also allows you to analyze your offering at any level of granularity in terms of various products or by whichever channel (online or in-store), bulk purchases vs single purchases etc.
- Discover Pricing Insights through Simulation – Pricing simulations through the advanced simulated testing that many price management software options offer help businesses just like yours to imitate the impact of price changes without applying the new price in real life, risk-free, to give insights into the outcomes of the proposed price changes. Without testing companies tend to “play it safe” and limit themselves on the amount of an increase which can be sustained, leading to missed opportunities or margin erosion. That is where the insights of the pricing simulation capability of price management software technology can assist.
Who is Price Management Software For?
Most business types will benefit when using 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.
There are some business model exceptions that may not derive significant benefits by using price management software technology. Please continue directly below for details.
Who Is Price Management Software NOT Right For?
Specifically, pricing management software may be of little value to companies that do not have very many products in their portfolio or little differentiation between their products.
Long story short, if your company does not offer a range of diverse 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.
That’s Great – Which Price Management Software is Best for Me?
Now you know how price management software does, how it works and the increased business efficiencies, departmental alignments, and pricing insights that it can provide for most companies.
You may already have an idea if the innovative technology of price management software like the award-winning Pricefx or similar is something that can help your organization achieve its business objectives, but you would like to make sure.
Check out the list below of 6 of the best price management software tools (other than Pricefx) and how they stack up:
However, to dive a little deeper into reviews of these 6 best price management software solutions available today (and how Pricefx stacks up against them), check out the handy article below:
Alternatively, if you are certain that Pricefx price management software is precisely what your organization is looking for to streamline your pricing processes, contact one of our team members now: