What Is Pricing Software? An In-Depth Review
While it started out in the hospitality and travel industries as a type of revenue management software, pricing tools have been further developed to serve a variety of industries, including telecommunications, retail, and financial services, as well as organizations in B2B vectors.
In today’s fast-paced world, pricing is key, as the shifting market demands, decreasing profit margins, and negotiation dynamics are always changing. If you’re curious about whether pricing software is what you’ve been missing, check out this expert breakdown of how it might help you manage, analyze, optimize, and execute your prices.
What Is Pricing Software?
Technically, pricing software is designed to help a company determine the best price for its services or products. The reality is a little more complicated than that simple sentence sounds. Using advanced analytics, algorithms, and maybe even some AI assistance, pricing software processes large amounts of historical data to deliver optimal pricing strategies and recommendations.
Your pricing software will definitely consider historical trends, but it will also factor in current promotions, product availability, product demand, market conditions, competitor pricing, and the cost to produce the product to calculate the ideal price for you right now.
You don’t have to follow the recommendations of pricing software, but it can help you make more data-driven business decisions and ensure your team has the tools to monitor fluctuations in pricing more efficiently and effectively.
Price Modes
You're probably familiar with price modes (also known as pricing architecture) that can guide your team in making pricing decisions. These modes include List Price, Matrix/System Price, Override Pricing, and Customer-Specific Pricing. However, they’re all manual systems that can be manipulated into messing with your bottom line. Pricing software can automate these frameworks and place guards in place against abuse.
Different Types Of Pricing Software
There are several different types of pricing software specifically designed to address certain workflows and pain points. Check out a few of these to discover which one sounds like the right fit for your pricing needs.
Pricing Management Software
This type of software continuously compiles and organizes pricing information in one central location so that your sales team can access the right data for price setting and management. Price management software is ideal for those in dynamic markets or companies with multiple locations because it ensures a single source of truth for more accurate pricing across the entire organization.
CPQ Software
This acronym stands for Configure, Price, Quote, and targets sales optimization needs that ensure sales reps can create accurate quotes faster. This pricing software is built to consider all applicable variables and rules, including discounts, customizations, and quantities, for automated, quick, and error-free quoting.
Price Optimization Software
If you need software that can analyze dynamic pricing inputs that range from currency exchange rate and cost to price elasticity and customer-perceived value for real-time pricing, this option might be the right fit for you. With price optimization software, you get a tool that can maximize your competitive edge through faster estimates based on real-world data.
Price Execution Software
While some might consider this a type of price management software, I think it should stand on its own because it does something a little different. Instead of simply creating a single repository of information for your team, this type of pricing software supports mass price changes through the central aggregation of expected changes due to unique factors, like region, salesperson, or customer.
This is a management-level tool that allows your leadership team to view and adjust price changes, approve new pricing requests, and track progress.
Pricing Analytics Software
Usually, pricing analytics is part of every pricing software solution and provides visualized reports based on your personalized KPIs, metrics, and goals. As you explore the pricing process and find the right pricing for your services or products, the analytics tools will help you understand performance and leverage the data for enhanced decision-making.
How Pricing Software Meets The Demands Of Various Industries
Pricing in every industry is a critical part of your strategy and can determine whether your business thrives or fails. Take a look at how pricing software can assist across these specific industries.
Ecommerce
Anyone in ecommerce knows they always need to move quickly to create an appropriate response to consumer demand. With dynamic pricing, you can leverage the power of automation and artificial intelligence to speed up pricing decisions and reach the right price points for that buyer sweet spot.
Retail
There have been many recent challenges in retail due to Covid-19 and the transition to online shopping. When you align online and offline pricing with pricing software that syncs price lists in your CRM, you can ensure a positive customer experience.
Construction
When it comes to building materials and construction, creating quotes is the most time-consuming part of the process — especially with product segmentation across various regions. Pricing software can streamline the process, manage customer agreements, and reduce quoting timeframes.
Benefits Of Pricing Software
Forgoing a manual and clunky price management system for pricing intelligence platforms with a more agile approach to pricing can save you a lot of time and money, provide more flexibility, and speed up your processes to keep up with a constantly changing market. Some other ways this software can meet your business needs include:
- Faster price execution
- More accessible data at every level of your organization
- Cloud-based systems offer better data storage and protection
- Enhance communication between sales and pricing teams
- Reduce manual work and pricing admin tasks
- Simplify quoting and pricing for sales
- Identify underperforming quotes, products, and services
- Control pricing across all channels and markets
- Collect data in real-time for future decision-making
Pricing software with API integrations, machine learning capabilities, and an ERP focus can have even bigger benefits for your organization than just standard pricing tools.
What Does All This Mean?
If your organization is suffering manual price tracking that is limiting your functionality, it may be time to upgrade to a different pricing solution. You’ll get better pricing data, forecasting, dashboards, and so many other tools that will improve profit margins and affect your bottom line for the better with purpose-made pricing software.
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