Price management is the ongoing process of setting, executing, and measuring pricing. It allows you to identify upsell or cross-sell opportunities, and prevents margin erosion with ease. However, attempting price management with internally developed spreadsheets will no longer provide a competitive edge for your business.
How does Price Management work?
Price management works by setting and executing the optimum price for the products in your portfolio in the context of your business objectives.
Price management allows you to set prices and price changes across a matrix of product lines, channels, and customer profiles, and empowers sales, marketing, and finance teams to achieve the revenue and margins you need. With price management, you can ensure the time spent constructing your pricing strategy is executed efficiently, effectively, accurately, and profitably.
Why is Price Management important?
Whatever industry you’re operating in, price agility is key. The days of having a fixed price list are long gone; price-savvy customers, increased competition, and volatile market conditions mean businesses need to stay on top of pricing. Price Management allows you to meet the needs of the business, whether that’s market penetration, revenue, or profitability, and do so dynamically by showing the impact of price changes and filtering changes through to channels and sales teams.
What are the three levels of Pricing Management?
Pricing strategies can be complex and should be based on the overall business strategy but when starting to think about price management it can be distilled down to three main levels.
- First up is supply and demand, the age-old law that is as fundamental as it ever was, particularly in a time of fierce online competition as well as extreme supply chain disruption
- Next up is product marketing, or as it’s often referred to ‘value-based pricing’, the perceived value to the customer.
- Finally, the transaction – this means the final price your customer will pay on each occasion, factoring in promotions, discounts, incentives, or rebates. At this level, pricing management becomes more complicated, and having the right technology in place is essential.
Applications of Price Management
Price management allows you to dynamically respond to market conditions, whether that’s operating or input costs, new competition, or inventory fluctuations. As well as enabling you to be more responsive, you can take control and capitalize on revenue opportunities such as seasonal sales.
In a B2B environment, price management allows you to offer tailored prices based on geography, customer loyalty, competition, volume, or any other variable that’s relevant to your business and customer base, to ensure you’re giving each customer the right price to make the sale as well as the margins you need.
Price Management adds more levels to your pricing without the admin headache
Think in terms of the construction of a building. Is it only two storeys? A two-storey building can make do with a staircase. But what if you wanted to add another four storeys? You will find yourself huffing and puffing your way to level six, hoping for an elevator to appear.
Price Management software is your elevator. It elevates your ability to handle more complexity in your pricing. It gives you the power to use a combination of discount-based components, such as dollar or percentage off based on volume breaks or total spend, and upcharge components like freight charges.
Automating this activity with price management software reduces the risk of margin erosion.
Price management delivers accurate pricing decisions and real-time pricing updates
With price management software, your Sales team is able to make the right decisions when it comes to discounting products to win new customers.
With pre-planned price discounts already in the system, a Salesperson can select available discounts as they enter the order. They no longer have to rely on remembering what discounts are available and when they can apply them.
Price management software also reduces the amount of time your team spends on pricing administration. Any changes to your pricing rules or promotional and customer pricing can be made quickly and are applied immediately.
Why price management software is the answer
However good you think your current price management system is, you have an uphill battle to remain competitive if you’re still using spreadsheets.
Errors can erode your profits, and time delays in communicating price changes can cost you the opportunity to react to a change in the market. Price management software gives you better control over your pricing and how it is used to win a new customer.
How Flintfox helps companies with Price Management?
Flintfox helps you find the magic in the margins, calculating and executing thousands of individual prices per second no matter how complex your pricing rules and strategy. The Flintfox Pricing Engine takes the pain out of price management, by automating the process – no more manual calculations or analysis or wondering whether you’re making the margins you need. You have total visibility of profit and the ability to adapt your prices according to channel, customer, or changes in your costs. With Flintfox, you set the rules and stay in control.