Want the latest news and articles delivered right to your inbox?

July 20th, 2022 | 7 min. read

Doug Fuehne
SVP Impact in Revenue at Pricefx

What is PraaS (Pricing as a Service) & How It Benefits You?

Are you looking to pricing software as a method to wring the best out of your pricing and use it as a pathway to maximize your profit BUT you do not have the capital for a complex and lengthy IT project right now? In this era of tight budgets, it is perfectly understandable capital is scarce. If that is the case, then activating enterprise grade pricing software with a lower entry cost could be exactly what your business is looking for. PraaS (Pricing-as-a-Service) could be the answer to your prayers – it will allow you to implement pricing software with less upfront costs.  

At Pricefx, we’ve spent many years helping companies satisfy their need for cloud-native pricing software. However, we have developed an understanding that many companies who are ready to invest in upgrading their pricing systems can experience any number of internal obstacles in aligning their dream pricing technology with their organizations fiscal constraints. 

In this article, we will discuss precisely what PraaS is and why we created it, why it could be (and might not be) for you, and alternatives to PraaS and the PRAAS implementation criteria within the Pricefx framework. 

What is PraaS? – The Definition

PRAAS-What-If

Does the PraaS acronym look familiar? It may. While you may have seen PraaS (Pricing-as-a-Service), bandied around the pricing industry landscape as if it were part of the wider industry nomenclature, PraaS with Pricefx is actually a specific innovation that your company can take advantage of to remove implementation and set-up costs of your pricing software solution during the first year of your subscription service. 

By taking advantage of a multi-year Pricefx PraaS subscription, you can have your pricing software solution up-and-running quicker, achieving your required and unique business objectives faster without the initial upfront costs that can be difficult to get approved from your company’s budget process. What that means for you as a Pricefx customer is you can take advantage of a higher year one Return-on-Investment (ROI) which allows you to make top and bottom-line improvements in your business faster. 

CTA-What-Return-on-Investment-Can-I-Expect-From-Pricing-Software

Long story short, PraaS takes away potential financial risks for your business. While augmenting the financial benefits for your business, Pricefx effectively ‘co-invests’ in your organization’s long-term success with a commitment to low upfront costs for your pricing software solution that will pay off for you big time down the track. 

What Type of Companies Are a Good Fit for PraaS? 

In short, PraaS is a good deal for companies who: 

  • Have tight expense budgets but not capital expenditure budgets.
  • Have extensive change management approvals processes, but still want to address efficiency and profit leakages immediately.
  • Cannot afford the initial higher price of the implementation of a pricing software solution.
  • Want to accelerate their evolution to automated pricing processes with flexibility and short implementation times.
  • Need to adapt rapidly to evolving markets and enhance their pricing capability.
  • Are required to show results quickly for their pricing software initiative to drive buy-in from internal sponsors and ultimate decision-makers.
  • Have decided enough is enough with their Excel spreadsheets and other outdated manual pricing systems.
  • Are looking for their pricing to demonstrate strategic impacts to their internal and external stakeholders and reach ROI ASAP. 

What Type of Companies MIGHT NOT BE a Good Fit for PraaS? 

As great as we think PraaS is, it might not be for everyone and every style of company.  

For example, if you are a large company, and the cost of a full-scale pricing software implementation project is only a small piece of your total income statement, it could potentially be more advantageous for your organization to take up a full implementation project (rather than PraaS) as your long-term total spend on your pricing software will be lower. 

If your organization is in that league, a SaaS (Software as a service) pricing software model may be preferable for your company. Unlike the annual combined payment model of PraaS, a traditional SaaS model consists of an annual software subscription plus a one-time implementation fee.  While paying by a SaaS model might be more expensive in the first year, your lower ongoing payments will end up driving more value in years 5 and beyond.  

Other than cost, your business may prefer a full implementation of your pricing software project over PraaS as you;  

  • Are certain that your pricing software configuration will require a range of extensive customizations and ad-hoc changes throughout the scope of a comprehensive and wide-ranging implementation process. 
  • Know that your IT Department has prior experience in managing large-scale and scope implementation projects.
  • Are confident your organization is comfortable with amortizing the large up front capital project spend and monitoring ROI for a large-scale pricing software project over several years. 

But on the other hand, (and getting back to why your organization may prefer the flexibility of PraaS) one benefit to you as a customer is the elimination of the need to commit over the long-term. 

When making a choice between SaaS or PraaS pricing software, it really does depend on the nature of your company, how it is organized internally, when and how you prefer to pay, and the unique set of business objectives that you are looking to achieve. 

PraaS vs SaaS Investment Costs Over Time & ROI – In 2 Graphic Nutshells

Comparison-Net-Benefits-Praas-vs-SaaS

Or in other words…… 

PraaS-vs-SaaS-Pricing-Software-Costs-Over-4-Years-&-Time-To-ROI-Example

What Are the Implementation Criteria for a Company Considering PraaS? 

There are, however, a range of additional criteria if you are considering PraaS and paying/implementing your pricing software by that method, including: 

  • Having and maintaining an unclouded vision in mind of what your business is looking to achieve and the requirements of how you intend to reach your goals with a PraaS implementation. 
  • That you intend your pricing software launch date (go-live) to be within a 6-month (26 weeks) timeframe. 
  • You are NOT looking to implement Price Optimization, Artificial Intelligence (AI)-informed Market Simulation or Machine Learning. 
  • You WILL be looking to implement any or all of the following Pricefx pricing software capabilities that can include; Pricing Analytics, Contracts and Quoting, Rebate Management and Workflows. 

Great – Now I Know What PraaS is – What’s the Value? 

After reading this article you now know what PraaS is and if it is for you and your organization PLUS if it can be of any benefit to achieving your unique set of business objectives in the short term and decreasing your company’s time to ROI. 

At Pricefx, we have spent the last decade successfully delivering our pricing solution to companies that want to hyperdrive their pricing. And during that time, we have also come across companies for which pricing software is not the right answer and telling them straight up that we may not be the best fit for them has felt like exactly the right thing to do. 

To check where you and your business fall on the two extremes of that spectrum, check out our recent article “6 Reasons You Don’t Need Pricing Software 

But on the other hand, if you’d like to show off the value of a pricing solution to your peers and to further support your internal pitch, please use our Margin Lift calculator to generate an estimate of the value you could achieve with our pricing software, based on your specific industry challenges and objectives.  

CTA-Pricefx-Margin-Lift-Calculator

About the Author

Doug Fuehne has over two decades of experience consulting with manufacturers, distributors, and retailers on pricing and supply chain strategy, including over a decade working in pricing software. Doug leads Pricefx’s Impact team, helping customers understand how they can drive value in their business with pricing software across their entire lifecycle. Before Pricefx, Doug led AWS’ Global Supply Chain practice, led Amazon Business’ Customer Success and implementation teams, led presales and professional services at a competitor to Pricefx, and built ecommerce businesses at Deloitte and Enron. Doug enjoys playing guitar, coaching youth sports, hiking the Pacific Northwest and traveling.