Why is dynamic pricing software a solution for organizational challenges?
Dynamic pricing software solves multiple challenges for modern organizations. Nowadays, businesses are exposed to more and newer pricing strategy opportunities, that were not available in the past. Due to the advancements in technology, companies now have a greater access to data for business decisions. Dynamic pricing software uses these new advancements and access to data to make pricing strategies of organizations better, by solving 5 different challenges.
#1 Static prices are often not optimal in each scenario
While many businesses offer static prices (prices that do not change based on certain factors), these prices do not always fit the demand curve perfectly. The demand for a product or service is partly based on the price customers must pay for it. For many products and services, demand drops if the price rises (significantly). Therefore, many businesses decide on a price that (1) creates enough demand among the entire target audience and (2) that is profitable for the business.
However, this pricing technique neglects the fact that customers pay more under certain conditions than in others. To optimally profit from this, organizations should raise the prices of products for an additional profit when the willingness to pay is higher.
However, when willingness to pay lower than normal, organizations should also be able to offer lower prices to generate revenue and cash-flow. For many organizations, multiple price points for the same product can generate additional profit and a greater revenue. Dynamic pricing software offers this, by automatically offering different price points for the same product based on different factors. It turns static prices into dynamic prices.
#2 Mundane tasks take up too much time
Many pricing professionals in organizations spend a lot of time performing mundane tasks to make and maintain pricing strategies. This can be calculating cost prices of products or monitoring competitor prices online. Dynamic pricing software can automate these tasks. So that pricing professionals can concentrate their time on more complex and creative tasks. This saves time, money and allows pricing managers to focus on greater challenges.
#3 Decisions are based on gut-feeling
Many pricing decisions are made on gut-feeling decisions. Certain prices are based on costs, competitor prices or because “it has always been like this”. While this is not necessarily a bad practice, it could be much better. Dynamic pricing software can analyse data thoroughly and offer pricing decisions and suggestions based on data and actual willingness to pay of customers. Something which should be preferred over assumptions that do not have a statistical fundament.
#4 Complex pricing strategies are often too much hassle
If pricing strategies are manually created by pricing professionals, it can easily become a lot of hassle. Especially when organizations have a large product portfolio or the desire to combine multiple pricing strategies in their organization.
Dynamic pricing software lets pricing professionals easily come up and apply their desired pricing strategies for different product(s) (groups). With a few clicks in a dedicated pricing dashboard, various advanced pricing strategies can be easily assigned to products. Complex pricing strategies thus become more available for more organizations.
Dynamic pricing for organizational challenges – A summary
Dynamic pricing software can offer the following solutions to complex business challenges:
- It can offer multiple price points for the same product automatically
- It can automate mundane tasks so that there is more time for complex challenges
- Decisions can be reasoned on actual data and statistics
- It allows organizations to have more complex pricing strategies
Dynamic pricing software is not the holy grail for every company, but for many businesses it can improve the current business processes. In the past, dynamic pricing software was mostly in-house built software, used by the world’s biggest companies. However, due to technological advancements, other companies can also reap its fruits with dedicated dynamic pricing software. Such as the SYMSON dynamic pricing management tool.
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