Whether you are a B2B sales company, a manufacturing,distribution, or retail business, you need to track your products’ as well as your customer’s profitability and keep a close watch on the pricing. Today’s pricing software market offers a myriad of automated tools which offers these benefits, but you need to pick the right one for your line of work and business, as not all types of pricing software are created equal in terms of their functions and the pricing insights they can facilitate for. That is why we decided to put together this handy snapshot on what the best pricing software is for you, based upon your unique pricing pain points.
At Strategic Pricing Management Group (SPMG) and Pricefx, we have been collaborating for a few years now, bringing our combined 30+ years of experience to bear. Together, we provide our shared clientele with a powerful range of B2B and B2C expertise to deliver a complete technology-and-data-driven pricing solution for a range of businesses thereby driving higher margins and better returns. With each pricing software project, we ensure that you are engaged with professionals who have deep and rich pricing expertise.
Leveraging that experience, in this article, we examine diverse types of pricing software and look at some common pricing pain points many companies have. This should help you choose exactly the type of pricing software you might want to start within your organization to power a more efficient and rewarding pricing process.
The Different Types of Pricing Software Available
Let’s jump straight into the 6 distinct types of pricing software and examine each may help you with in your pricing endeavors.
(Please note, this is not intended to be an exhaustive list and some pricing software types can be used to conjointly solve several intersecting company pain points);
Long story short, price management software adds more levels to your pricing without the associated admin headache of error-prone data input. And it is scalable as your business grows.
Think in terms of the construction of a building.
Is it only two floors?
For a two-story building, making do with a staircase will be fine.
But what if you want to add another five floors?
Right, the stairs are not going to cut it any longer.
You’ll be required to install an elevator.
In pricing terms, price management software is your elevator.
The technology elevates your capacity to add more levels of complexity to your pricing. Price management software weaponizes your data to produce more profit and protect margins over time. Meanwhile, it will also continue to drive automated current pricing decisions based on your historical sales and real-time data.
Pricing Analytics allows you to consolidate your data and analyze every aspect of your pricing strategy to discover what helps you to improve win rates, gain customer insights, identify further unique business opportunities, and above all, increase your margins and profits.
Future-proof your company’s market position with price optimization software. Your data may currently be locked in siloed systems and your sales team may not have the required information at hand to defend prices with your customers.
The best modern price optimization software is enhanced by Artificial Intelligence (AI) and Machine Learning (ML), allowing for data to flow easily and quickly so you can make accurate and fast pricing decisions. Confidently outline pricing strategies that your sales team and decision-makers can get behind and champion.
Allow your sales team to respond to quote requests faster, with higher accuracy and therefore, increased confidence to win more deals. Use error-free Configure-Price-Quote (CPQ) capability to produce unmatched quote response times to sales inquiries through AI-enhanced pricing simulations and calculations.
With one system, take the guesswork out of your discounting and manage all your rebates to clients, promotions, and special pricing from one place. Regardless of the level of complexity, based on structures and on-and-off invoice conditions, merge the information resting in your back-end ERP (Enterprise Resource Planning) systems such as SAP, Oracle, etc. with rebate management software.
6. Channel Management Software
Use channel management software as a ship & debit claims management tool to guarantee long-term savings and customer satisfaction. Implement a quick and efficient claims management process to reduce errors and miscalculations, thereby decreasing turnaround time and improving transparency – while delivering cost savings for all parties.
Pricing Pain Points: How to Solve Your Company’s Problems With Pricing Software
All businesses analyze their pain points to get an idea of how to improve their business efficiencies and bottom line. Companies and brands such as yours, are fixing their pricing pain points every day. However, failure to address them can potentially lead to a company’s demise, simply for not taking a long and honest examination of one’s own business and solving your pricing predicaments quickly and efficiently.
Money is a big topic in business, and many business pain points are caused by a lack of it and solved by more of it.
Pricing software can help you to not only locate where money is leaking away but also how to optimize your returns for the future.
While the pricing pain points listed below are not exhaustive, it does cover several of the most common pricing pain points we most commonly hear from our clients.
To solve them, we identify which type of pricing software specifically acts to address the respective pain points outlined below.
1. Pricing Pain Point = Lack of Analytics Ability
Type of Pricing Software Required = Pricing Analytics Software
In the current business world, you will notice many business organizations have reams of sales, transactional and customer data, BUT, many companies have extraordinarily little information and therefore, even fewer pricing insights from their extensive data sets.
The predominant reason why this happens is because many businesses still use spreadsheets to do manual pricing. They are limited in the sense that a lot of time is required to convert the data into proactive and segmented market or pricing moves.
Naturally being ready, willing, and able to react to inflation, fluctuating market moves, and rapidly changing raw material indices in real-time is key. Pricing analytics software will assist in making it so but having the right type of pricing analytics is important too. You need to have the right AI-informed analytics in place that enables quick responses and the ability to price intuitively and accurately across a broad set of pricing objectives and constraints.
The above figure illustrates the Value-Price Matrix.
This helps you organize your strategies and tactics to make well-informed pricing decisions. But how do you seamlessly manage implementing this approach across a large number of products?
Let’s take a simple hypothetical example. You are running a tire company, and you sell three types of tires:
High performance tires for sports cars – high value
Tires for tractors – medium value
Winter tires for standard cars – low value
If you were to price proportional to value, you will be tempted to price high, medium and low respectively for the three products. But you choose the following pricing strategy you have decided that you want to:
Increase Sales volume on your high performance sportscar tires to lower production costs – penetrative pricing
You decide to price in line to value for truck tiers which let’s say translates to a standard 30% profit margin (representing fair value)
You decide to price higher than the value the winter tiers provide, which let’s say translates to 25% profit margin (representing cream skimming)
You want to apply all these rules in every market you sell in except for the United Kingdom, where you recently entered the market and provide an additional 20% discount to help you win market share
You want to re-assess these outcomes every quarter.
With AI-informed pricing analytics software, these five business outcomes can be built into a single rule to automatically calculate your tire prices worldwide.
In addition to the typical margin/revenue pricing rule, AI can manage hundreds of rules while automatically helping you optimizing performance.
2. Pricing Pain Point = Understanding the Market & Your Customers Willingness to Pay
Type of Pricing Software Required = Pricing Analytics Software
Staying on top of your customers’ willingness to pay is an often-overlooked pricing point but a critical one to be addressed to enable your business to establish value-based and dynamic pricing. Willingness to pay is also identified using price analytics software but takes the segmentation power of the tool to a whole new level.
Based on your understanding of your customers’ willingness to pay, and, your customer base, you need to have the analytics tools available to split them into distinct parts. Your AI-informed pricing analytics tracks the different segments, but you may require even more advanced technology offerings to breakdown those customer segments even further (into sub-segments) than what the pricing software currently allows for.
Looking at the example of the tire company, to further optimize prices, you would want to understand the different customer segments and their willingness to pay. By performing advanced market analytics, you could discover new customer segments (sometimes niche) with different willingness to pay.
3. Pricing Pain Point = Reacting to Fluctuating Market Conditions in Real Time
Being price-nimble and able to react in real-time to the fluctuating costs in distribution channels, raw materials used in production and any number of other factors will be critical in protecting profits and preventing margin leakage. Depending on the industry and the nature of the organization, the choice can be to use a standalone or a combination of one or more distinct types of pricing software in combination to solve pricing pain point(s) of maintaining pricing agility.
Learn More Tips Here on How to Manage Fluctuating Prices
For companies that have different use cases for pricing software, can you imagine trying to manage all the information available in varying or different parts of the company system and marry them all together in Excel? The negative impact such a scenario is far reaching, not to mention the immense financial losses which could occur due to being unable to tie the disparate systems together.
Let’s revisit the example of the tire company which is suddenly facing an issue with a key raw material used for manufacturing, carbon black.
Due to recent world events, the supply of this has been severely impacted and led to a doubling of prices.
Unless you can quickly take pricing actions like passing on the increase in raw material costs to your customers, your margins will erode.
You will need to use a combination of pricing software package types to keep you proactively in the pricing loop and maintain profitability.
4. Pricing Pain Point = Producing Professional Quotes
Type of Pricing Software Required = CPQ Software
One of the best ways to maintain profitability and improve margins and win rates is to give customers a sense and delivery of quality service that they are unlikely to receive elsewhere. More than ever, right now, customer experience is everything. Something as simple as producing a professional and timely quotation will help your business stand out from the pack.
As a byproduct of producing timely, error-free, and customer-friendly professional quotes, implementing CPQ software will transform your sales cycles into more efficient, productive, and successful ones. By accelerating the product configuration and proposal process and reducing the risk of producing inaccurate quotes, salespeople will have a better chance at establishing a more positive relationship with the customer, offering a positive buying experience, and establishing prices that they can defend.
Getting Started with Easing Your Pain Points with Pricing Software
If you are not sure where to begin, use a pricing software partner as a pathway to ease your pricing pain points.
A pricing software partner often has deeper and more knowledgeable ‘real-world’ pricing software expertise than pricing software vendors do.
Each different pricing software partner can give you a unique perspective on overcoming your pain points. It is often overlooked that the best pricing software vendors use multiple strategic and implementation partners and Pricefx has some of the best partners to choose from.
If your business is searching for pricing software but lacks the infrastructure, time, or expertise to get it done, learn more here about the Advantage Pricefx Partner Network, SPMG, and other pricing software partners available for your business to work with.
On the other hand, if you already have the required knowledge in place and you’re ready to resolve your pain points ASAP, and stay one step ahead, then check out the article below that takes you through choosing the right pricing software for your company’s unique needs;
Managing Partner of the UK & EMEA region ,
Venkat Vaidyanathan is the Managing Partner of the UK and EMEA region of SPMG Global, a consulting company specializing in all aspects of pricing from strategy, process and the implementation of tools, software, and research. If you would like to discuss your organization’s pricing, reach out to him at firstname.lastname@example.org