Any business wants to maximise profits by pricing their goods and services at the right level – and to control those prices using an accurate pricing solution or price engine. Traditionally for many businesses price management has been conducted using Excel spreadsheets to calculate optimum prices – and to convey these prices to all concerned in the sales process. No-one is saying that Word and Excel Price Lists are a completely flawed system of managing pricing but the modern, accurate and more efficient way is to use a pricing software rather than the old fashioned methods that are so susceptible to error, manipulation and corruption.
A Pricing Solution can also be referred to as: a Price Engine, Pricing Software, Price Monitoring, Pricing Tool or Price Management.
If you are really serious about profit growth, then read on... you really do owe it to your business.
What is a Pricing Solution?
A Pricing Solution is the process whereby companies analyse, plan, publish, execute and negotiate prices. Most companies, large or small, base the price of their products and services on production, labour and advertising expenses and then add on a certain percentage so they can make a profit. This is Cost-Plus pricing. More complex strategies around price will be necessary however to combat highly competitive markets and to deal with global customers. A Pricing Solution makes this a much simpler task, more accurate, and enables you to take advantage of advanced pricing rules to optimise your prices.
Why is Accurate Pricing so Important?
Through its pricing policy, a business will want to:
achieve the financial goals of the company and ensure profit growth
fit the realities of the marketplace
support a product's market position and be consistent with the other variables in the marketing mix.
8 Benefits of Using a Pricing Solution
1. Pricing software enables real time pricing – and is cost effective
There will be no need to spend days and weeks on pricing administration. 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 time and money.
2. Pricing software allows for 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.
3. Pricing software allows for price optimisation
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 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.
4. 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, a pricing solution takes away the stress, and automatically identifies conflicts that require resolving.
5. Pricing software allows a 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.
6. Pricing software enables a move away from cost-plus pricing
If you’re looking to implemment 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.
7. Pricing software provides 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.
8. Pricing software allows focus on key pricing opportunities
A pricing solution allows you to quickly identify key pricing opportunities and to increase deal sizes because of cross-selling and up-selling guidance.
- Word 2016 for Dummies by Dan Gookin, Nov. 2015.
- 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.
- Pricing for Profit:how to develop a powerful pricing strategy for your business by Peter Hill, 2013.
- Harvard Business Review on Pricing, 2008.