Advantages and disadvantages of pricing software

Guest Post | Nov 25, 2022

Image: Pexels/Karolina Grabowska

For many companies, pricing software is seen as a way to solve all the problems associated with this process. Yes, software today boasts a range of features and capabilities. These include even the ability to perform various tasks according to given algorithms using artificial intelligence. But are ready-made software solutions able to get rid of all problems? Let’s take a look at their advantages and disadvantages.

Should You Use Pricing Software?

Customers need personalization in every area of retail. According to Epsilon about 80% of them want to see it at different stages of the purchase, including pricing. Today there are no software solutions that could completely replace the work of specialists, but they can help with the automation of work processes. Today it is as important a tool as CRM. Why? Let’s look at the benefits.

Benefits

Pricing software has a number of key benefits:

1. Building optimal prices. The software is able to analyze the overall pricing. This allows the business of both the B2B and B2C segments to remain competitive. By collecting data from different sources such as CRM, GA, e-commerce platforms, etc., the software can offer the best pricing options.
2. Evaluation of the overall assortment and marketing strategy. The finished software analyzes these aspects to offer the best pricing recommendations according to the target audience in a particular country, city, age category, and other parameters.
3. Timely response to possible violations and unforeseen situations. If your business made a mistake and broke the law, there are very few products from the most popular category in stock, or there are other circumstances due to which you can lose money, the software will definitely notify you. The main thing is to properly tune the algorithms and build the most important aspects of tracking for the application.
4. Achieving company goals. By building algorithms based on the right strategic decisions, the software can help lead a company to success. Ready-made solutions of recent years offer sales staff a simplified way to negotiate, manage products and strategies, plan operations for the future, etc. That is, they, as it were, take responsibility for many processes important to the company, allowing it not only to solve its business tasks but also to spend free resources on expanding the company and improving the strategy.
5. Optimal pricing. When forming recommendations on the formation of the cost of a particular product, the software is able to focus on the purchase price and evaluate the pricing policy of competitors. In addition, it considers the overall market approach to pricing and target specifics. Ultimately, the company gets a more personalized approach and adaptive pricing.
6. Analysis of the impact of different decisions. The software is able to analyze the weight of different business decisions and report their impact by type – which ones improved sales and which worsened sales. The performance of the strategy is evaluated according to various criteria from income to different types of profit. The software then offers reports for each metric. They give options based on the existing processes and after various options for optimizing them. After that, you can choose the most suitable option for the company.
7. High prediction accuracy. Yes, the software can provide almost 100% accuracy in pricing forecasts. All this is possible thanks to a two-tier approach. New programs carry out analysis not only on the basis of initial data but also based on forecasts. They evaluate how and what can affect sales, and then issue recommendatory data.
8. Opening opportunities for experimentation. When using the software, you can safely experiment with your own hypotheses and simulate different situations. This is convenient because at any time you can move away from the existing strategy by launching a new branch, analyze the possibilities, advantages, and disadvantages, but at the same time not lose a cent. Now any, even the riskiest and thoughtless, can be implemented in life, but you do not need to spend a lot of money, be afraid and think about the possible consequences.

In addition, out-of-the-box pricing software is capable of:

• reduce the number of price exceptions;
• stabilize price ranking processes according to various tasks;
• optimize the process of reporting and analysis;
• improve the compliance of the system with the declared pricing policy;
• set up uniform templates for interactions;
• to improve the experience of interaction with the business of new sellers and representatives.

And this is not all that can be said about the advantages of using software, because. The market is constantly replenished with more and more new business solutions that are aimed at simplifying pricing issues.

Disadvantages

The software has the following drawbacks:

• does not have the ability to reflect the willingness of different customers to pay, according to the category determined by them;
• unable to form a price offer for new customers or for low-speed products;
• will not be able to automatically implement the strategy;
• not able to independently follow the described pricing strategy;
• does not have the ability to turn analytical data into reports to understand the need for further action;
• is not able to replace the person and representatives of the sales department in matters of individual pricing.

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As you can see, the disadvantages are much less than the advantages.

Conclusions

There are many benefits to out-of-the-box pricing software solutions that can significantly reduce pricing management resources. But, like any product, it has its drawbacks, based on which we can say that in the near future the software will not be able to completely replace qualified sales specialists and a well-developed strategy. The decision to implement it is not difficult – it is definitely worth it, but before starting the interaction, it is important to assess the risks and learn how to properly use the pricing software.

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