Taking the Right Approach in 2021
As the amount of information businesses handle nowadays continues to grow, companies across all industries struggle with the ability to easily structure, manage, and analyze such large volumes of data to make the right strategic decisions. When organizations are managing thousands, if not millions, of product prices, this can be a challenging task because to keep many prices accurate and in line with many changing variables such as customer demands, costs, and evolving competitors’ strategies, businesses cannot rely on slow and error-prone price adjustments.
Although spreadsheets and ERP systems have been essential tools to manage and store prices, they are not as powerful when it comes to delivering dynamic pricing across digital sales channels to meet the needs of modern buyers. Traditional price management methods are giving way to advanced pricing solutions, which can provide real-time price calculations, scalable and available even in periods of peak demand.
In Part 2 of our blog post series, we will emphasize the importance of using simulations and flexible, fully configurable data visualizations to drive data-driven decisions and to deploy with speed and precision competitive price strategies that are always adjusted to the latest market conditions.
Consideration #3 – Driving Data-Focused Pricing Decisions in Your Business
In addition to storing your pricing data in a centralized manner, pricing technology provides pricing leaders with a holistic, 360-view of the latest and most relevant information that allows you to gut-check intuition with defensible data. When it comes to making decisions, pricing software is your ally that supports you in building your pricing strategies. Some advanced pricing solutions even use a simulator to give pricing teams the ability to analyze impact on business performance and profitability by testing a pricing strategy outcome prior to launching it. By using a simulator, you will be able to defend your pricing teams’ decisions in front of C-level managers and other departments using actual evidence, proving out how your pricing model will be beneficial to the business across each and every sales channel, as well as to the customers you serve.
When current pricing strategies need to be adjusted due to changes in external conditions, pricing analysts can first build out and compare different pricing scenarios without affecting actual prices. This requires sophisticated comparison capabilities where you can define your most important key parameters for the business, such as forecasted annual revenues, volume, and margin percentage, based on which strategy corresponds to the business objectives you want to achieve. Then, leverage pricing software technology to take the validation of your different pricing strategies one step further, by using a tabular and a visual format to easily compare the key parameters of the current and potential strategies to objectively determine the best outcome for the business. This allows you to run the best pricing strategy for the business in that new environment only after you are clear on the outcomes.
Another key pricing capability for data analysis is the ability to compare different scenarios of the existing price waterfall chart itself, which is offered only through the most advanced technologies. By selecting key measures in the waterfall as an override or a percentage or value change, pricing leaders can execute different analyses and better pricing adjustments based on market dynamics.
Consideration #4 – Relying on Meaningful Analytics Purpose-Built for Pricing Practitioners
As your business grows, your pricing teams need to be able to better understand how pricing strategies affect performance in order to take meaningful corrective actions. With the help of pricing analytics, you can get insights on whether your products are underpriced or overpriced for the market; how sales teams are performing; which deals were won, which lost and why; each customer segment’s preferences; every sales channel’s profitability, and so much more. Analytics are important because they can help you figure out how to optimize pricing to maximize the revenues and profits for your business.
As Covid-19 continues to affect many industries into 2021, advanced analytics become even more important to businesses that need help in adjusting their strategies to the changing environment, in order to maintain profitability and eliminate revenue leakages. To hone in effectively on sales opportunities, improve decision-making processes, and remain resilient in the market by drilling down into all aspects of their performance, companies can make optimizations to their costs and operations. With the help of smart visualizations, pricing leaders can also discover what the value drivers for customers are and how to improve profits and sales results. With analytics purpose-built for pricing, you can create customized dashboard views with quick access to your preferred and most important data sources, enabling you to track progress and objectives while drilling-down into results and trends. Your team will be able to zoom in on every aspect of business performance and run comparisons across channels, geographies, products, and customer segments.
Another useful capability is creating and sharing custom reports and analyses like the price waterfall with other departments. This gives colleagues visibility into hidden costs, discounts, and the possibility to uncover and understand reasons for margin and/or revenue leakages. Being able to rationalize your business’ pricing strategies across the end-to-end price waterfall is key to enabling harmonized omnichannel pricing, in line with sales strategies and driving a superb customer experience for buyers.
Having the ability to configure and use diverse charts for analysis is essential, but what is even better is having these insights in the pricing solution you use every day. Advanced pricing technology empowers pricing leaders with the comprehensive analytics they need to monitor business results and take relevant pricing actions in the solution itself, without the need to log in and log out of different tools. Prescriptive insights are extremely helpful: they highlight trends, price, and profit variances, and even data outliers, which when spotted can be analyzed and corrected directly in the price lists. However, most pricing teams struggle to create and update charts in spreadsheets because pulling all their data together for a visual analysis can be a very tedious process. If you are wondering how to resolve this challenge, look for a software solution that allows for quick, user-friendly configuration and editing of charts. Some of the leading pricing software vendors have enabled intuitive workflow navigation, where you can select a specific point on a chart and view more information about it, which takes minimum efforts but offers great visibility into granular information. With a customer-inspired user interface (UI), the solution displays the data in the most comprehensible way, allowing pricing leaders to view and analyze their information from any business perspective.
To see year-over-year change in sales margins and revenues, and really understand what is driving these changes for your organization and how they correlate (like price, volume, costs, product mix, etc.), pricing leaders could rely on margin and revenue driver charts. Other businesses find great use in the Pareto Chart (also known as the 80/20 Rule or the Pareto Principle), which helps them uncover the top contributing factors, in terms of customers, products, channels, and regions, to the highest percentage in the business’ results. Based on that information pricing practitioners can perceive what actions or improvements to take to drive maximum benefits and profitability for the company.
Lastly, when the C-suite needs quick custom reports with diverse charts and data perspectives, advanced technology helps you streamline your analysis with fast access to the charts you frequent most and by remembering your last applied selection preferences when you move across different visualizations. And you get the answers you are looking for in minutes, not hours!
Next week we’ll look at how with the help of flexible pricing algorithms and logic, overlaid with AI, pricing leaders can build even the most complex dynamic price strategies, personalized for every unique buyer and fit for any business challenge. And you'll learn about the essential pricing capabilities for b2b digital commerce. Don’t forget to visit the PROS Resources hub for the final Part 3 of the blog post series “Pricing for Survival or Pricing for Success?”.
About the AuthorMore Content by Victoria Dreharova