Why businesses should consider using pricing software
Pricing is a very broad topic and touches upon multiple different business departments, such as marketing, sales, product development and more. Because of this, pricing should be seen as a strategic process which needs to be in line with the objectives of a business. Is revenue growth the main objective? Or is an “X” percentage of profit margin per sale more important? All these factors influence the pricing process of a business.
Some businesses do not put too much effort into their pricing strategies and base their pricing on gut-feeling or use a cost-plus pricing strategy. While this pricing strategy can work out perfectly fine and ensure a good profit margin and revenue for a company, it does not take into account other factors that determine how good a certain price will perform.
Willingness to pay of customers greatly influences how high or low companies can set their prices and the prices of competitors also influence how your prices are perceived. According to research, 86% of customers compare prices with competitors or competitive products before buying a product, while only 28% of businesses take this into account when setting their prices.
Reviewing, analysing and incorporating all the factors that can influence the outcome of the pricing of your product, can be very labor-intensive, costly and difficult to do. That is why a lot of businesses still use gut-feeling, excel spreadsheets and their historic prices as the main sources for their pricing. However, pricing can be done better, more efficient and easier by using dedicated pricing software. Pricing software is software that analyses current prices, gives advice to obtain more optimal pricing and automates as much as possible in the pricing process – from start to finish.
What businesses should use pricing software
Almost all businesses can make use of pricing software to optimise their prices and to automate their pricing processes. However, pricing software heavily depends on data. Therefore, pricing software works best if the business that uses it, has data available. Many different industries use pricing software – from airlines, to hotels, to e-commerce and wholesale – both in a B2C and B2B context. The businesses that can profit most from using pricing software are businesses that think that changing their prices will benefit their business objectives, while not entirely knowing what prices to change or what pricing strategy to choose. In order to know how pricing software can benefit your business objectives, we have explained 5 scenarios in which pricing software can help you out!
Scenario 1: Deriving insights from your pricing strategy
Nowadays, more and more business acknowledge that data and insights are important for improving business processes such as pricing. Pricing software allows you to analyse all the historical pricing data such as amount of sales, order volume, costs and sales price to identify patterns. These patterns can give you inisghts in your profitability, sales, market dynamics and customer behaviour. While deriving insights from your pricing depends a lot on analysing your past, this practice can be the foundation of an analytically based price change, which can set you up for future successes!
Scenario 2: Taking the pricing of competitors into account
With the introduction of online shopping and e-commerce, comparing prices has become easier and easier for customers. Nowadays, you are only a few clicks away from comparing multiple vendors for the same product. Having a competitive pricing strategy, which takes into account the prices of competitors can give you that edge, to stand out positively from the rest. SYMSON offers companies the possibility to collect daily market prices from competitors in the market due to their direct relationship with Google. With this information, you can decide how you want to position yourself against the competition and you can automate this process too – to never miss out on any changes in the market.
Scenario 3: Using a pricing engine to improve and automate your pricing
For many businesses pricing can become a very time-demanding and manual process if it is done with gut-feeling and basic spreadsheets such as Excel. However, it does not have to be this way with pricing software that has a pricing engine. A pricing engine allows businesses to manage their own pricing strategy by applying pre-defined pricing strategies to products or to make your own pricing strategies with the help of business rules. In SYMSON you have a Pricing Strategy Builder which allows you to assign certain business rules to the pricing of products, so that your product will automatically be sold for a price that suits your pricing objectives.
Scenario 4: Using pricing software to optimise your prices
The pricing strategies of many businesses are already performing well, but not amazing… According McKinsey, Simon-Kucher and BCG, price is the most important factor in the profit realisation of a business. Research has shown that a 1% price increase can lead to a whopping 8% in margin increase! While a 1% decrease in costs or a 1% increase in sales leads to a much lower margin increase. Pricing software, such as that of SYMSON, helps businesses not only to manage their pricing but also to give advice on how to change prices for better results! This is not based on guesswork but on analysing data from multiple sources with the help of AI and smart algorithms. This happens continously, to always offer the best pricing possible.
Scenario 5: Combining pricing strategies for better results
Pricing can be a very long and tedious process when pricing managers have to do it by hand or in basic spreadsheets. Implementing a single price strategy can already be a lot of work, while implementing multiple pricing strategies can be a project that takes months. However, the more factors you take into account in your pricing, the more optimal your price likely becomes. SYMSON offers companies the opportunity to assign multiple pricing strategies to individual products or to different product groups. This is as simple as clicking on a few buttons, without having the hassle of doing it all yourself by hand.
Pricing has become more and more important and research has shown that it is the main driver of improving your profit margin. While most companies still use gut-feeling and basic spreadsheets such as Excel to manage their pricing, a lot of businesses can profit tremendously from using pricing software, such as that of SYMSON. SYMSON offers pricing software that helps companies in the following 5 scenarios:
- Deriving insights from your pricing strategy
- Taking prices of your competitors into account
- Using a pricing engine to improve and automate your pricing
- Using pricing software to optimise your prices
- Combining pricing strategies for better results
Do you want a free demo to try how SYMSON can help your business with margin improvement or pricing management?Do you want to learn more? Schedule a call with a consultant and book a 20 minute brainstorm session!