Are you already beginning to suspect that Excel is not the best way to manage your prices?I'm assuming that the aims of your current pricing policy are to:
- Achieve your financial goals and ensure profit growth
- Fit the realities of the marketplace
- Support your product's market position
Historically Excel has been a tool to manage prices but when your company has a large set of product items and hundreds or thousands of customers, various pricing rules plus other variables, using Excel to manage prices becomes (at the very least) quite painful! Much more seriously, it could be losing you sales and affecting your bottom line.
Let’s go through some of the main reasons why this could be the case – and why you might want to consider adopting an online pricing solution as a much more effective alternative to manage prices.
If you work with Excel, you will not be able to share your spreadsheet updates with other staff immediately. It may take some time to inform them about price changes and obtain the confirmation that they are using the latest pricing information.
This might not be a problem if you are content with the fact that your business might lose sales due to your inability to communicate the adjusted price quickly. I suspect that this state of affairs will not be acceptable to you; deals can be won or lost in seconds and you need a better tool to manage prices.
Prone to Human Error
Accuracy is difficult when you're manually maintaining a data set, and it only takes one incorrect copy and paste or formula change to slip up in a big way. Sometimes the error may even lay hidden for some time before the full impact is ascertained. Can you afford to let this happen?
Vulnerable to fraud/abuse
While you can put security measures in place within an Excel spreadsheet, these are easily breakable with the right expertise. If the spreadsheet ends up in the wrong hands due to, for example, emailing the file to the wrong address, or having your laptop stolen, would your pricing model being in the public domain be troublesome for your business?
Furthermore, as all the pricing data is in one offline spreadsheet, it only takes one disgruntled employee to alter a formula for the worse, without being detected, or send the contents onto a competitor. There is a better, more secure way to manage prices.
Has there ever been a situation where you wanted to set different discount rates for your customers depending on who they are, where they are, how long they have been customers, which items they bought from you, etc?
If you have a list of rules like that, it is not always an easy job to work out an algorithm to apply in Excel. If you have a long price list, your job is even more hazardous as you must ensure you don't make any mistakes or mix up the rules on your spreadsheets.
In Excel, it can be difficult to configure complex rules that involve multiple customer types and product segments. Therefore you may be forced to go line by line when making a pricing change.
This is time-consuming and often means you concentrate on updating the high-volume items, and make updates to the lower volume items less frequently.
If this sounds familiar, what does this mean for your business in terms of profitability? If you have to react quickly to a change in material costs, or a competitor price promotion, will you be able to ensure all prices are updated at the click of a button with Excel price management?
With a pricing solution, changes to your benchmark pricing, pricing rules, promotional pricing, customer pricing and exception pricing can be made in minutes with easy to use workflows. A pricing solution saves you both time and money.
Admit it. You hate it when you have to engage in lengthy conversations with your sales staff via email during their negotiation processes. Likewise, your sales staff don't want to ask their prospects to wait for days to get your approval for the deal. Unfortunately with Excel there is no easy way to set clear-cut policies and make sure your sales team can quickly work out these policies.
Although you can try to simulate different scenarios for your product price with Excel, it’s a complicated process. The variables in your model can differ depending on how you decide to segment the market, your competitors’ prices, and many other factors.
Unless you are able to create a one-size-fits-all model on Excel, most of the time you will need to construct different algorithms. If you do not want to be bogged down by technical details and want a flexible system that can be easily customised at any time, then you should look beyond Excel.
Good Reasons to Use Price Management Software
Make Better Pricing Decisions
A pricing solution makes it easier to anticipate the business impact of pricing changes with a visual financial summary. There will be clear visibility of where you are losing margin because items are priced too low, or where you are losing revenue because items are priced too high.
Achieve Price Optimisation
The key is to optimise your pricing decisions, and get to a point where you can be sure you are reaching the highest price possible whilst still supporting revenue and profit growth.
Because you have your sales history at your fingertips, a pricing solution means you can easily identify the areas of margin leakage. A pricing solution can even flag up and rank the areas of greatest opportunity.
Ensure Rule Conflicts are Handled Automatically
If you have previously struggled with ensuring there were no rule conflicts, for example from any promotional activities that were running, a pricing solution takes away the stress, and automatically identifies conflicts that require resolving.
Visible Full Audit History
Excel is often just a snapshot of what is happening. A pricing solution however logs all the changes behind the scenes, giving you the power to question what has happened previously, and keep a record as to the rationale of individual pricing changes.
Move Away From Cost-plus Pricing
If you’re looking to implement Price Segmentation then an online pricing solution is a must. Simply by moving away from a cost-plus approach, you’re already on the journey to value based selling, which statistically is proven to support profit growth.
Gain Regular Updates on Your Competitors
With a pricing solution you can receive your competitors' prices as often as you need, with weekly, daily or even hourly updates. It will allow you to benchmark all your product lines against competitors, and gain a clear view of competitor product assortments.
Focus on Key Pricing Opportunities
A pricing solution should allow you to identify vital pricing opportunities quickly and to increase deal sizes because of cross-selling and up-selling guidance.
Take the Plunge
You might be reluctant to throw the spreadsheets out the window but breaking away from Excel is easier than you might think. Pricing software has come a long way in recent years, becoming a must-have technology at leading Fortune 500 companies. You already know the reasons why Excel is holding your company back so why don't you finally "take the plunge" and speak to us today?
11 Disadvantages Of Using Excel To Manage Your Pricing
What Excel Cannot Do For A Price Manager
8 Reasons Why Excel-based Pricing Could Be Hurting Your Business
12 Benefits of Customised Pricing Software
What Can a Pricing Solution Do For Your Business
The Strategy and Tactics of Pricing by Tom Nagle and John Hogan, 2016
Pricing Strategy: Tactics and Strategies for Pricing with Confidence by Warren D. Hamilton, 2014
Pricing with Confidence: 10 Ways to Stop Leaving Money on The Table by Reed K. Holden and Mark Burton, 2014