Price is the core pillar of a profitable enterprise, and the associated digital pricing tools are vital for a strong overall business strategy. Pricing has to deal with the best opportunity and the highest risk.
Making quality pricing decisions relies most often on pertinent data and adequate pricing tools.
Thus, digital pricing tools bear an increasing importance in the pricing process. And they improve day passing, bringing in more intelligence and helping deciders to make better pricing decisions that conserve profits.
Nowadays, pricing tools play a central role as they enable businesses to price dynamically. Meaning preserving market share when prices decrease and capturing supplementary revenue streams when the market expands. Tools have other functions too, like revealing new business models and ways of improving products based on a better understanding of buyers’ behaviour.
Pricing tools are a valuable instrument in the hands of skilled and competent pricing, sales, marketing or finance teams. On their own they can’t do much. Powerful pricing tools used correctly and aligned with product and pricing strategies support capable teams in making superior pricing decisions faster. To deliver sustainable results tools should convey a strong business logic.
Pricing tools become more and more sophisticated incorporating artificial intelligence and large amounts of data. And now they aim to give a hand at the improvement of the online customer experience. Plus, they are likely to bring innovations in terms of pricing models.
Most markets experience five types of customers in report with the price:
- Bargain hunters
- Brand hunters
- High end buyers
- Risk avoiders
- Occasional buyers
This is the foundation for a savvy market segmentation that allows a business to properly optimize its strategy, marketing and sales activities.
What is a pricing tool?
Today a pricing tool or a digital pricing tool is a pricing software, a solution used to analyze, define, manage, optimize, predict and implement the most appropriate pricing strategies for a business’s products and/or services.
Digital pricing tools are complex software solutions that deliver time sensitive data, updates and insights concerning the price performance, information on special cases, etc.
The most important features of a pricing tool include:
- Pricing optimization – a digital pricing tool that respects itself delivers data and analytics to generate a strong pricing strategy and insights on the profitability of sales, customer segments, product lines, etc.
- Flexible pricing or Dynamic pricing – the pricing solution used should be able to integrate and change various pricing methods and levels like value based pricing, cost based pricing, competition based pricing, etc.
- Custom pricing – the pricing software should allow the possibility to insert custom prices for certain categories of clients based on various factors like sales volume, customer value, contract terms, payment schedule, discounts, rebates etc.
- Integrations – a reliable pricing tool should offer the possibility to integrate with third party solutions like CRM, ERP, e-commerce, CPQ, DMS, POS or other retail solutions to disseminate the price changes directly on the interface where shopping takes place or where final price quotes are made.
- Strategy based characteristics – each business has its individual needs, and consequently their pricing strategies require different features. Some pricing optimization software will target margin optimization and based on timely data, trigger automated price updates to reduce prices for slow moving products. Other pricing tools will target cost modelling and generate cost forecasts in initial stages to preview price structure earlier.
- Full integration – complex businesses require supplementary integration of the digital pricing tool used with inventory management software, shipping management tool, product design application, or a custom made app that is, for example, embedded into the site or other main software.
- Multi-currency operations – other pricing tools will include a multi currency feature, very appreciated by international companies with operations in multiple countries that have different currencies.
- Insights concerning the competition – when being active in a very competitive market where differentiation is rather insignificant, knowing the moves of the competition is paramount. Some pricing softwares offer the possibility to mine data from the competitors’ sites and offer you an edge to better price your products or services.
Main benefits that a pricing software brings in
- Identification of the best price range for a certain product/service based on a series of factors among which demand, production costs, indirect costs, marketing costs, etc.
- Optimization of price based on concrete and large volume of data, to develop a deeper price differentiation
- The possibility to custom prices for some categories of clients, based on specific criteria like volume, loyalty, etc. Price customization plays a decisive role in customers’ acquisition and customers’ retention
- Increases sales process efficiency by reducing the number of errors
- Measures and reveals which is the real impact of price modification in time
- Offers a solid base for the creation of new pricing models taking into consideration real market data
- Predict with a high or medium level of accuracy the EBITDA impact of price increase
- Dynamic pricing softwares enable to adapt prices rapidly in regards of internal and external factors
- Pricing management and optimization software enable both operation and calibration of the best prices
- Tenders and Bids become with the right data easier to succeed with
- Simplify the pricing of large set of products ranging from 1,000 to millions of references
From a company’s point of view the digital pricing tool they choose should:
- Respond to their specific pricing requirements
- Integrate with existing infrastructure like CRM or ERP systems
A company always has the option to choose an all-inclusive pricing software or modular solution for targeted pricing tasks.
Today the best digital tools for pricing rely on artificial intelligence, big data analytics, machine learning and complex algorithms. They make use of a broad range of data as input and sometimes might interfere wrongly with the pricing strategy implemented by the company as they deliver results automatically.
Before using sophisticated digital pricing tools pay attention to pricing fundamentals
Digital pricing tools have brought the pricing process to a new level. That’s incontestable. But, the pricing fundamentals remained the same. Tools bring the best results when they are used inside a strong pricing strategy that dispose of all the necessary skills and capabilities.
To get the pricing process right, businesses have to pay attention to the following rules:
Market segmentation. Before relying on digital tools to help with pricing, a business needs to clearly establish who are its clients and what are their needs.
Pricing is not a standalone concept, it is dependent on customers, suppliers, competitors and company’ s internal dimensions. Before entering a market the leadership has to carefully consider all the implications of pricing. The pricing strategy needs to reflect the business overal’s strategy, with the product and market expectations.
Clean data is of paramount importance. Leaders dealing with pricing are concerned to input the correct data feed and to obtain solid and relevant data. Both qualitative and quantitative data.
Cross-functional responsibility. Pricing implies the collaboration of multiple teams and the lack of a clear point of accountability often leads to delayed and inefficient circuits of decisions among involved teams.
Obviously the right pricing fundamentals, combined with a skilled team, a strong strategy and the appropriate pricing optimization software is likely to deliver great results.
Here is our short list of pricing tools that you may want to take a look at:
Best digital tools for pricing
DarwinTech is a recently launched pricing software with great ambitions of delivering a very user friendly interface, a modern design and aims to reach the top in terms of Customer Experience (CX). Their declared purpose is to become one of the best digital tools for pricing. The app features three main modules:
- Commercial & pricing strategy – a selection of over 50 pricing strategies templates ready to be customized on your business reality and set your business ready for growth and profit maximization
- Business analytics – an exhaustive collection of over 1500 indicators are put to work to extract meaningful and useful insights from your data. Get high quality insights, relevant KPIs and a system ready to learn and evolve with your business
- Risk & decision making – in order to maximize the value in your decision process you need to assess and reduce the financial and commercial risks, measure the decision impact and implement a seamless approval flow.
DarwinTech comes also packed with a series of solutions like: CVD Pricing Model – integrated pricing algorithms; Governance Frame Tracking – streamlines the decision process; Value Proposition Improvement – complete overview of your business to build a strong value proposition; Discount & Sales Channel Optimization; Price Increases Calibration – adequate process and tools to increase prices and deliver maximum margin/volume combination.
Pricefx is more than a simple app, it is a platform in the pricing environment. A high performing suite of pricing software modules built on an integrating platform that includes connected apps, algorithm libraries and a series of Accelerator Packages Pricing IP.
Pricefx prides to have built the best digital tool for setting pricing, a price management solution suite able to evolve with your business and its future needs.
Their platform includes all the necessary functions implicated in the pricing process:
- PriceBuilder – allows price calculations based on a large series of criteria and factors
PriceAnalyzer – reports and graphics that allow the identification of the poor performing products, marketing actions or accounts. They are based on a root-cause analysis.
- PriceOptimizer – relying heavily on data and machine learning, this is a powerful tool to test and optimize strategies, customer segments, margins, etc
- PromotionManager – as the name says, this is the module to manage the price discounts and offers within a friendly interface
- QuoteConfigurator – it integrates with the major CRM apps to best support the sales team
- RebateManager – an interface that helps manage the all rebate actions under the same roof
- PFX Platform – permits the integration of Pricefx’s SaaS pricing solutions with other systems like ERP, CRM, eCommerce, etc.
- ChannelManager– manages debit and ship claims in one interface
PROS claims to help decide on more than 400 million prices every single day, and to support more than 1.7 billion forecasts in over 30 industries. Not to mention a collection of 20 in-house patents and others pending. Obviously this is one of industry’s leaders, very proud of their machine learning and AI powered digital pricing tools.
This is a provider that caters to the industry-specific pricing. Their pricing solutions include:
- Price Optimization & Management
- Airline eCommerce
- Selling Improvement
- Configure Price Quote (CPQ)
- Airline Revenue Optimization
PROS science backed products include:
- Control: Price Management – a comprehensive dynamic pricing management solution to facilitate pricing strategy creation and execution. It helps to easily manage the pricing policies, identify margin and revenues leaks, manage rebates, calculate real time prices, etc
- Guidance: Price Optimization – a price optimization software powered by ultimate artificial intelligence technology, to enable an easy control of the products’/services’ prices
- Smart CPQ (Configure, Price, Quote) Software – this is the best digital tool to compare pricing and deliver instantly the right price for the right product/service. The cutting edge technology empowers the automation of the sales experience while keeping it personalized, fast and simple.
- Opportunity Detection – machine learning and data science at the service of the sales team, to help her spot unexploited sources of new sales and growth opportunities with current clients. And identify the correct buying patterns that generate ROI.
- Airline Products – as leading provider for the airline industry empowering 80% of the industry and over 2 billion tickets sold yearly, they have dedicated products. These are Airline Revenue Management, Airline Shopping, Airline Real-Time Dynamic Pricing, Airline Group Sales Optimizer, Airline Retail, Airline Merchandising
Vendavo aims to empower global businesses with sales intelligence solutions and innovative pricing apps that deliver powerful insights capable of adding millions to the pipeline. The main purpose is to maximize all margins for improved profitability.
Their solutions are:
- Vendavo PricePoint – A cloud based solution for strategic price management. Packed with over a dozen features, the most prominent characteristics are an accelerated implementation methodology; machine learning based pricing analytics; real time dynamic pricing that takes into consideration local market conditions, competition and cross border data.
- Vendavo Deal Price Guidance – A cloud based solution relying on artificial intelligence that offers price guidance and quotation for various deals. It optimizes automatically deal rates, customer’s experience and profitability goals.
- Vendavo CPQ Cloud is the right tool for commercial enhancements. It is agile and scalable and its mission is to catapult sales productivity and value for businesses that implement it.
- Vendavo Margin Bridge Analyzer – make superior, more profitable decisions for your business with this price/volume/mix analysis tool that allows comparable analyses of business units, product lines, sales teams
- Vendavo Profit Analyzer provides strong and detailed analytics to spot leakage from unnecessary price variation or discount, unrecovered costs and calculates the value that these opportunities might bring. The scope is to identify the real profitability of products and clients and maximize it.
A complex tool to help businesses improve their overall results and particularly accelerate sales. Oracle CPQ gathers together product data, business rules, pricing information, contracts, discount controls, to help improve margins and revenue. The purpose is to reduce the sales cycles and to automate the offering.
Oracle CPQ comprises the following modules:
- Configuration – Functional configurations based on intelligence to provide the right mix between the clients’ exigences and business purposes. Guided pathways for easy navigation inside the sales process.
- Pricing – A functionality that delivers automated prices in due time and aims to ameliorate the sales team performance, as they focus more on prospecting not on administrative details
- Quoting – Generates relevant quotes in fractions of a second. The app fills and creates automatically the proposals for clients with the right pricing, branding, formatting and the corresponding documentation.
- Integrations – Flawless integration with CRM and ERP systems to reduce the sales cycle time and enhance the profit margins for the business.
Pricing software is a great add-on and will help improve results, but is not able to do the pricing job on its own without the proper pricing fundamentals, structures, processes and strategy. In order to obtain the best results all these links of the pricing chain have to be in their right place and work properly.