Ever get frustrated that a competitor has changed their prices just after you changed yours? Do they always seem to be able to react instantaneously to any change you make? If so it’s likely that they’re using some form of price automation. If you’re changing prices manually, price automation can be incredibly irritating to go up against. It can feel like anything you do is immediately countered by your competitors.
Unfortunately, unless you have some form of automation in place it’s impossible to keep up with other merchants who do. You will lose out whether prices go up or down. If competitor prices are decreasing, not reacting fast enough can lead to your prices being undercut and therefore you will lose market share. If competitor prices are increasing, not reacting quickly enough will cause you to sell products for less than they’re worth and lead to you losing margin. Due to this if you’re selling goods online it’s well worth considering implementing some form of automation.
So what does price automation mean and more importantly, how does price automation actually work? Fundamentally, there are three stages to price automation. The first stage is data collection. The second stage is price calculation where these data points are used to calculate the price your product should have. The third stage is pushing these calculated prices to your website for customers to see.
Often when we talk about price automation we think about automating all three stages of the process at once. However, it can be a huge leap to go from no automation to automating all parts of the pricing process and in reality, may seem too risky. The good news is with BlackCurve you can automate these stages separately with minimal risk and join them altogether when you’re ready!
Stage 1
Automate - Price Collection
This is where all the data required to make a pricing decision is brought together. This is usually your competitors’ prices but can also include other data points such as cost prices, sales figures, and stock levels. Automatically getting notified when key competitors change price will very rapidly give you an insight into how your market is behaving and who are the key merchants within your marketplace. What this means in practice is that within BlackCurve you can very easily set up daily reports straight to your email. This report will summarise all the price changes your competitors have made in the previous 24 hours allowing you to check whether any large changes have happened overnight when you have your morning coffee! If you are new to price automation this is where we suggest you start as it’s a risk-free way to bring a pricing process into your day-to-day. business.
Stage 2
Automate - Price Calculation
Your competitors have changed their prices, how should you react? Say you don’t want to take an aggressive position. You just don’t want to be undercut when prices go down or lose margin when prices go up. Basically, you want to follow the market. If you’re doing this manually you probably check ten to twenty key products and adjust the prices on a few key lines. But what about the rest of your inventory? Did you remember to check to see if your suppliers have changed their prices? Or how much you’re spending on advertising per product? Seems like an awful lot of work, right? It would be for a human but fortunately, you’ve already centralised your data within BlackCurve in Stage 1. This means that you can now use the power of BlackCurve’s decision engine to automate your pricing calculation. Within BlackCurve, in just a few minutes, you can configure a rule set that will not only follow competitors when their prices change but also take account of changes in cost prices, advertising spend, protect your margins, and a whole host of other conditions. The great news is you can set up a price recommendation report for your whole Product Inventory that will be delivered straight to your inbox.
Stage 3
Automate - Price Control
The final stage is to automate the pushing of prices to your website. Any changes in your market, costs, or advertising spend will lead to a new price being calculated and immediately be updated on your website or other channels. Whilst this stage can take some investment at the end of it your pricing process has become completely hands-free letting you concentrate on pricing strategy! No more losing market share or margin due to slow reaction time! No more coming in on a Monday morning and realising the prices you pushed on Friday have been completely wiped out!
Summary
At BlackCurve, we break price automation down into three key stages: data collection, price calculation, and price pushing. Doing this allows you to automate different parts of your pricing process in a risk-free way! Your first step is being notified of your competitor's price changes and working out how you would like to respond. You can then automatically calculate pricing suggestions. This will ensure that you not only stay competitive but also include any cost price changes or react to seasonal price swings. Finally, when you’re happy with the other stages you can hook this up to your website with full confidence that the data and calculations are correct.
