Worried that you're charging too much for your products or services and putting people off? Or maybe you're laying awake in bed at night wondering if you could be charging more and boosting your profit margins? With the help of pricing optimization software you can make sure you're hitting the pricing sweet spots and keep tabs on what competitors in your market are charging.
Here we'll explain how to choose pricing optimization software, giving you an idea of what these applications do and how they can benefit your small business to help you make a decision about what's right for you.
Let's embark on the journey!
Pricing optimization refers to a process or technique that helps businesses determine what to charge customers for their product or service. It also helps the business to understand how their customers might respond to different pricing propositions for their products and services.
According to Chris Fletcher, research director, Gartner, "price-optimization software takes every piece of available internal and external data, from spreadsheets to ERP systems, to create individual pricing models designed to maximize profits and deter salespeople from excessive discounting."
Pricing is one of the trickiest parts of any marketing strategy. You don't have to get it right the first time, but you also have to ensure that it keeps up with the ever-changing marketplace. If prices are set too high, they could drive customers away. Set them too low and you can end up creating a customer base that is habitual to deep discounts, which will hit your profits in the long run.
Research has revealed just how powerful price optimization can be for a business. A landmark study in Harvard Business Review found that a 1 percent improvement in price can result in an 11.1 percent increase in operating profit.
So, if you are still relying on spreadsheets to analyze and manage prices, it's worth considering a pricing optimization software to price intelligently and make your business profitable.
Here are three questions to ask yourself in order to figure out if your small business is ready to implement a pricing optimization solution:
Do you have a wide variety of products or services in your portfolio ? Due to the growing number of products and services in the market, the workload associated with making price decisions on multiple products can be immense.
How complex is your product? If a product has large variants within the same category, it would require a better pricing mechanism. The complexity can be compounded by the varied size of packaging for the same product. For example, if you price a unit of product at $1, should you price a pack of four units at $4 or less than that? Without a proper pricing mechanism in place, there is a risk of making pricing errors.
Who are your customers? How well-informed are customers about the prices offered by two companies for the same product? With the advent of smartphones and availability of online and mobile price comparison options, customers can today easily compare prices of any given product. This adds further pressure on the company to closely monitor and align their prices to combat competition .
There's a ton of pricing optimization software out there, and app vendors are constantly adding features to their products to extend their functionality. So, at times, choosing which pricing optimization software to go for can be tricky. Before deciding on one-size-fits-all-solution, have a think about what kind of solution actually suits your requirements.
Will you go for an in-house software or choose a cloud-based solution ? Choosing SaaS over on-premise can eliminate the fear of data loss as well as the risk of making huge up-front capital investments.
Will you be able to integrate it with other software you are already using ? Can it pull data from one application to another? Most pricing optimization software can be integrated with existing company systems, such as forecasting tools , CRM , and ERP . For example, integrating pricing optimization software with CRM can help augment efforts around customer segmentation, fare fencing, promotion, demand stimulation, and demand forecasting.
Will it have an iOS and Android app to ensure anytime, anywhere access ? Standalone pricing optimization software clients for mobile can extend the functionality of a tool beyond the desktop. For example, CallidusCloud 's mobile app provides sales representatives with offline capabilities designed to enhance their ability to deliver quotes and proposals to customers instantly, no matter where they are.
Will it be regularly updated to make sure it meets your ever-changing needs ? You have to ensure that the investment you're making in the pricing optimization software won't be tapered by a lack of investment in the product by the vendor. Do your homework and find out how often the application is updated and what channels are available to report bugs or suggest improvements.
Will your organization be able to adapt to the system quickly with minimal training? Most of the time, companies underestimate the expertise, staffing, and training required to fully utilize the benefits of the new system. Find out how others have coped with the on-boarding of different pricing optimization solutions by reading customer reviews.
What pricing options are available ? Pricing optimization software is usually available with two pricing models - freemium or subscription-based . Freemium pricing allows users to use the limited functionality version of software for free with an option to upgrade to full functionality version on payment. The option to subscribe offers a payment structure wherein users can purchase software for a specific duration at a set price.
Once you are clear about the above key points, the next step is to make sure the pricing optimization software has the features you need. Here are some of the main things you should be looking for:
To make things easier for you to get started in your search, here's an overview of three of the most popular pricing optimization software solutions.
CallidusCloud Configure Price Quote (CPQ) aims to help in the price quoting and sales processes. The software helps to determine pricing trends using its pricing behavior intelligence. If you're looking to find out which products are selling the most and at what price CPQ can serve up this data. It'll also give you a breakdown of who these were sold to and when. The application has mobile functionality for configuring, pricing, quoting, and selling products and services.
Price: available on request
PriceGrid is a competitive price analysis and monitoring solution. The software is designed to help quickly analyze pricing on multiple products. It claims to send instant notifications when a competitor changes pricing structure, introduces new products, and files for patents.
Price: from $49 per month
Prisync is a solution that helps in tracking competitor's prices and product ranges. It reports this information through its web dashboard, email alerts, API and various other reports. Prisync promises to send daily or immediate price and stock change notifications. It caters to all sizes of eCommerce companies.
Price: from $49 per month
You can check out the full list of all pricing optimization software on GetApp.
For a more detailed look at the key players in the pricing optimization software market, check out our comparison page, where you can see at-a-glance how the applications differ in terms of features, integrations, mobile support, and online presence.
Hopefully, by now you would have made your choice and if not, at least you would have become clearer as which software to go for among all the options available.
Once you've chosen your pricing optimization software, or even if you're just demoing some apps we'd love to hear your feedback. Go ahead and leave a review of the solutions you've used.