Move over, Excel.

What is pricing software? Here’s everything you need to know.

Shifting market demands. Negotiation dynamics. Decreasing margins. If you’re like most pricing professionals, you recognize that the days of working out your pricing in a simple spreadsheet are long gone. As the market gets more complicated, so too does the business of pricing. Pricing software is the solution.

What is Pricing Software?

At its core, pricing software simply helps companies determine the optimal price for their goods and services. It uses advanced algorithms to process large amounts of historical data to quickly spit out an optimal price recommendation. Pricing software factors in market conditions, competitive analysis, promotions, product availability and revenue goals to make the best competitive pricing strategy.

 
The benefits that accrue from switching to pricing software can range from 1% to 3% of gross margin dollar improvement.

Why Your Business Needs Pricing Software

Pricing software offers a set of functionalities based on machine learning and algorithms. Typical benefits of adopting pricing optimization software include:

Real-time pricing.

This includes pricing rules and benchmark, promotional, customer and exception pricing.

Better pricing decisions.

Assists decision makers in anticipating the impact of price changes. Visual pricing summaries provide information about where you are losing income if prices are too high or losing margin if they are too low.

Improved price optimization.

This means you are assured of getting the highest possible price and, at the same time, sustaining profit and revenue development.

A complete audit history.

Records all changes running now and historically – allowing you to question what occurred before and to record the rationale of pricing changes.

It moves you away from a cost-plus approach.

This sets you on the road to price segmentation and value-based selling.

Enhanced competitive pricing strategy.

Allows you to see your competitors’ prices hourly, daily or weekly. This gives you a leg up on your product lines versus your business rivals’.

Strategic pricing opportunities.

With guidance for up-selling and cross-selling, you can identify important pricing prospects and maximize deal sizes.

How to Get the Best out of Pricing Software

Pricing software offers a number of benefits such as automating tedious data mining, helping to align internal departments and, most importantly, achieving a 1-3% gross margin improvement. However, the extent of benefits a company can experience also depends on how carefully they select, adopt and use the pricing software solution.

Here are a few best practices that will help you reach the full potential of your pricing solution:

Ensure senior leaders are all aligned on pricing strategy.

Lack of alignment can result in limiting the tool’s usefulness. Also, changing the strategy during or after a rollout can limit the tool’s potential.

Vet your data inputs.

Typically, the more accurate your data, the better your results. If cost information is incorrect or lacks sufficient historical data, recommendations will be impacted.

Set clear standards and guardrails.

Ensuring your whole team is trained on revised pricing processes may seem obvious, but it can make or break the transition. It’s also important for leaders to set clear boundaries for when analysts can make their own decision versus when they require approval (like on a price change of more than 10%). This gives analysts the right level of flexibility and accountability.

Choose products carefully.

Not all products are equal, and sometimes items with low turnover don’t, for example, have enough historical data for pricing software to accurately recommend a price.

Stay focused on your strategy.

Decisions around loyalty programs and discounting must also be made with your pricing strategy in mind. Pricing software such as the solutions offered by Pricefx can ensure these remain aligned. There are other pricing elements that are not managed by a pricing software that must also be aligned, such as in-store product placement, signage and advertising.

Have more questions about pricing software and how it can help your business?

How Pricing Software Meets My Industry’s Demands

Pricing in any industry is competitive and critical to the survival of your business. But it’s also important to look at the unique demands that are driving your industry.

Building Materials & Construction

The quoting process is time consuming, particularly with different product segments across different regions. A pricing software can streamline your pricing process and manage customer agreements. See how one company cut their quoting timeframe by 50%.

View Case Study

Ecommerce

Ecommerce cannot afford to be slow in response to consumer demand. Leveraging the power of dynamic pricing is one way to speed it up. See how Amazon uses dynamic pricing to hit the sweet spot with buyers.

Read Article

Retail

With the recent challenges to retail, many are turning to local ecommerce while continuing to provide a unique shopping experience. Learn how one company was able to align its online and offline pricing to ensure a positive customer experience.

View Case Study

Will My Business Benefit from Pricing Software?

Is pricing software a good fit for every organization? According to Gartner’s 2019 Market Guide for B2B Price Optimization and Management Software, pricing software is not a solution for everyone. However, they do recommend considering it in one or more of these situations:

  • The volume or rate of list price changes is impractical or expensive for people to perform without automation.
  • Price management is distributed across multiple regions, but requires some centralized control.
  • The organization seeks to leverage advanced statistics and machine learning to fix suboptimal pricing practices identified in historical deals. It has a large volume of clean, historical sales transactions with which to train the PO&M models.
  • The organization wants to calculate prices and discounting thresholds in real time based on factors such as the type of customer, the mix of products, product costs, product availability, competitors, geography and corporate priorities (for example, targeting revenue or margin).

What Questions Should I Ask When Selecting a Pricing Software Solution?

The task of evaluating a pricing software solution can feel daunting. We’ve gathered the top questions you should ask before selecting a pricing software solution.

What are the capabilities of the pricing software?

Pricefx pricing solutions provide you with a single source for all your pricing data, they automate tedious data mining, allow you to test different pricing strategies, allow you to respond to market fluctuations in real-time and much more.

Does the pricing software integrate easily into existing systems?

Pricefx enables real-time pricing based on real-time data by integrating seamlessly into your current technology stack as well as legacy systems.  

What kind of return on investment can you expect? And when?

Pricefx’s cloud-based platform ensures one of the fastest time-to-value ratios. Typically, the ROI on a pricing software is between 1-3% in gross margin improvement.

How quickly can the pricing solution be up and running?

Pricefx delivers a full suite of standard pricing analytics, management and CPQ tools in just 6 weeks!

Can it manage high-SKU and high-volume operations?

A high-SKU or high-volume operation is nearly impossible to manage without a pricing software. Pricefx allows you to price a lot of products and services in real time, accurately and efficiently.

Does the company have experience in your industry?

A clear understanding of the unique demands driving your industry is a must. Pricefx has pricing experts in: Food and Beverage, Discrete Manufacturing, Process and Chemicals Manufacturing, Distribution and Wholesale, Building & Construction and Ecommerce & Retail.

What do reviews say about their customer support?

In G2 customer reports, we continue to rank in a leadership position. See how we ranked against our competitors and hear from some of our customers. Learn more >

Pricing Software Makes Good Business Sense

Learn more about our industry-leading pricing software.

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