Pricing Tools
Enabling better, more consistant pricing decisions
Price setting decisions are extremely complex, yet managers often will try to evaluate all the dimensions in their heads in order to come up with an optimal price for their products or services.
Pricing tools provide companies with a structured, repeatable, recordable approach to evaluate these complexities. Important pricing decisions still have to be made, but using industry best-practice pricing tools and methods improves the consistency and quality of these decisions and with it, the commercial outcomes.
Pricing Solutions has the analytical and development expertise to develop client specific tools on many software platforms, from Excel tools to complex business intelligence solutions. We have experience of developing pricing models with over 500 clients across the World, coving descriptive, diagnostic, predictive and prescriptive analytics.
Below are three tools that we commonly use with customers to improve their pricing decisions:
One of the key tools for evaluating customer value is the Perceived Value Map, which helps companies quantify and analyse ‘soft’ value attributes.
Value Maps are often initially produced from internal wisdom, and enable more productive discussions regarding the relative value vs. competitors. Customer research can also be used to verify or inform the value map, allowing you to analyse customers by segment, and track value movements over time.
The Pricing Power Assessment Tool (PPAT) evaluates the 5C’s of Pricing: Cost, Customer, Competitors, Capacity and Market Conditions. It provides a quantified approach to evaluating if now is a good time to be aggressive with pricing or to be cautious and protect what you have.
This method gives senior managers the confidence to be more courageous with pricing and hence capture increased profitability.
Transactional pricing tools look retrospectively at the ‘true net price’ of your sales data. Comparing at a true net price level including all discounting, rebates, free stocks, additional services, etc., gives a true apples to apples comparison deal-by-deal.
Having visibility of this data using a Price Waterfall Analysis, Price Band Analysis, Price Dispersions (right) etc., allows finance or product managers to identify areas of profit leakage. Improvement related to these opportunities are often very quick to implement and provide fast return on investment.
White Paper: How to Automate Your Pricing Infrastructure
What you learn’ll from this white paper
Despite the evidence that shows pricing is the most critical predictor of profitability, the science of pricing is still relatively underdeveloped for most organizations, and nine out of ten businesses have the wrong pricing automation system in place.
The purpose of this 18-page white paper is to demonstrate how having the right pricing automation software can maximize business profitability in the long run.