Are your concerns about whether you've got your pricing right keeping you awake at night?
You don't have to be an Einstein to realise that in order to maximise your profits and stay ahead of the competition you have to price at the optimum level. What your business needs to do this is an accurate price management system (definitely not spreadsheets) – and the modern, accurate and most efficient solution to all your pricing demands is to invest in a pricing software solution.
Things change so fast these days and if you're in a competitive marketplace, staying one step ahead of the competition is crucial. This is what pricing software is all about – to safely and speedily manage all your pricing data, allowing you to focus on what matters most to your business, maximising profits.
Why you shouldn't be using spreadsheets to manage your pricing
In May 2012, JP Morgan Chase lost more than $2 billion. The cause wasn't some massive stock market crash, nor a rogue trader. It was an inaccurate spreadsheet.
A single error introduced in one formula meant that the bank widely underestimated the risk of their investments and waved goodbye to $2 billion!
If this chaos caused by spreadsheet errors can happen to a Big Four bank, it can happen to you. And if these errors are in your price management spreadsheets, they could easily be enough to cause serious damage your company. Research has revealed that:
- 35% of companies have fundamental data errors in their spreadsheets.
- 26% of companies have formula errors in their spreadsheets.
- 19% of companies have formatting errors in their spreadsheets.
Is all this giving you a headache?!! If you are still using spreadsheets to manage your prices here are some good reasons why you should be concerned. Using spreadsheets means:
- You are compromising accuracy
- You are compromising security
- You are compromising efficiency and revenue
- You are wasting much of your sales team's time
- You cannot work collaboratively
- You experience a lack of consolidation
- Decision-making/changes to pricing takes too long
- A detriment for business continuity
- It takes ages to get a quote to a customer
In the past, Excel has always been considered a powerful tool to manage an organisation’s price list. However, when your company has a large set of product items that can expand to hundreds or thousands of customers and various pricing rules etc., using Excel to manage the daily tasks of price management can turn into chaos.
If you truly want sales people to deliver good results, let them focus on doing what they are best at, which is building relationships and selling. Don’t force them to navigate through a list with thousands of products and many complicated rules, just to arrive at the recommended selling price.
Don’t expect them to be analysts and come up with the optimal price and quotes on the spot. Don’t make them worry about losing a potential deal because they can’t answer a customer’s request for quotes immediately. Empower them with the software tools that gives them the instructions and analytics they need, so they can do their job more effectively and efficiently
So, is your current process of managing prices in spreadsheets holding your business back? How can you avoid all of the above pitfalls?
Reasons to use Pricing Software instead of Spreadsheets
It might be that you will choose an off-the-shelf software solution to your pricing management issues – or you may prefer to go with customised pricing software if your needs are complex. Whichever solution you decide upon, you really do owe it to your business to make this investment. It will save you time, money and maximise your profits – here's how:
Pricing Software Enables Real Time Pricing – and is Cost Effective
Changes to your benchmark pricing, pricing rules, promotional pricing, customer pricing and exception pricing can be made in minutes with easy to use workflows.
Pricing Software Allows for More Accurate Pricing Decisions
It will be 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. Pricing software will accurately point you towards your pricing 'sweet spot'.
Pricing Software Optimises Pricing Tests
The key is to optimise your pricing decisions and get to a point where you can be sure you are achieving the highest price possible whilst still supporting revenue and profitable growth. Because you have your sales history at your fingertips, you can easily identify the areas of margin leakage and complete pricing tests to find that optimum price. Pricing software can even flag up and rank the areas of greatest opportunity.
Pricing Software Ensures 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, pricing software takes away the stress, and automatically identifies conflicts that require resolving.
Pricing Software Allows For A Full Audit History
Pricing Software 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 – not something available when using Excel.
Pricing Software Enables a Move Away from Cost Plus Pricing
If you’re looking to take advantage of applying different pricing strategies across multiple product, customer and market segments, 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 business growth.
Pricing Software Allows You to Analyse the Competition
You will 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.
Pricing Software Allows You to Focus on the Really Important Stuff
It allows you to quickly identify key pricing opportunities and to increase deal sizes because of cross-selling and up-selling guidance.
However good you think your current system of price management is, there are serious flaws involved if you are still using Excel. Errors can seriously eat into your profits. Time delays in communicated price changes can cost you money because you have lost the opportunity to sell at the new price for the period before the new price 'gets through' to the sales force.
This will be especially important if you're correcting an error or reacting to a change in the market. This makes it almost imperative that you change to a Price Management solution that allows you to quote professionally, increase deal sizes, reduce errors and drive better pricing decisions.
The Strategy and Tactics of Pricing, Tom Nagle and John Hogan, 2016
Pricing Strategy: Tactics and Strategies for Pricing with Confidence, Warren D Hamilton, 2014
Pricing with Confidence: 10 Ways to Stop Leaving Money on the Table, Reed K Holden and Mark Burton, 2014
Pricing for Profit: How to Develop a Powerful Pricing Strategy for Your Business, Peter Hill 2013