Find out how to get the most out of Pricing Software
So, your business has made the decision to implement a pricing tool such as BlackCurve. Fantastic! You’re well on your way to get an average 1% - 3%+ gross margin improvement.
This is because pricing tools help maintain pricing accuracy, make the pricing process more efficient and effective, as well as help you identify better price points for your goods and services that drive overall business growth. Whether you reach this 3% or more margin improvement, it will not just be the result of simply implementing a tool and sitting back to watch the cash roll in! No, in order to reach your full potential, it is important that the following steps are taken:
An implementation of pricing software will fail if senior management is not on board. This is especially true if you’re coming from a position where there is heavy discounting in your organisation, or relatively simple pricing methods such as cost-plus pricing is the norm.
Changes in pricing strategy is a "hearts and minds" exercise, and everyone needs to be singing off the same hymn sheet - that better pricing will be good for your business in the long run.
Bonus: you can download the Ultimate Guide to Retail Pricing absolutely FREE
Check Out a Few Pricing Tools
Pricing tools, like people, come in many different shapes and sizes, and some are targeted specifically at certain industries.
If you're in retail
On the other hand, if you're a manufacturer, you're going to need a tool that can support you with pricing strategies based on geographic location or customer spend.
Ensure Your Data is Good
The phrase “rubbish in, equals rubbish out” (there is a post-watershed version of the phrase that you’re probably more familiar with!) is very true. If you’re not confident in the quality of your data, such as sales history or competitor pricing information, then it should not be used in the pricing tool until this has been rectified. It will only harm your business if you’re making pricing decisions based on inaccurate data.
Beware of Price Elasticity Results
Pricing software is fantastic at helping you measure the price elasticity of your products and services. This will enable you to identify areas where you can increase price and not affect the volume sold, or decrease price and increase volume sold. It is important that you ensure your pricing software factors in what is a representative sample for your business.
If there is not enough historical sales history for a product, e.g. a low turnover item, the price elasticity result is likely to be inaccurate. Make sure you select products that have a high turnover of goods to make your initial pricing tests. Remember, pricing is a continual journey of tweaking and improving. You’re not going to get everything right on day one.
Keep Your Eye On the Overall Strategy
Pricing tools are great at allowing you to manage individual price points but it's important not to forget the elements that impact price outside of the tool. Price perception such as product placement on billboards or TV adverts, all the way through to company-wide loyalty schemes, each has an impact on your customers' willingness to pay.
Getting all these tactics to work in conjunction is the Holy Grail of business. Pricing tools, such as BlackCurve, allow you to track the impact of company-wide discount codes and loyalty schemes.
Used in the right context, pricing software will be hugely beneficial to your business. You'll be asking yourself "why didn't I take the plunge sooner?" As outlined in this article, if you ensure that areas such as data quality and stakeholder alignment are in place, soon you'll be reaping the rewards and outsmarting your competition.
This all considered, what are you waiting for? Book a chat with us now to find out how we can help you increase revenue and grow profit using our pricing software.