What Is Pricing Optimization Software?
Pricing optimization software helps sales businesses to determine at what rate they should sell their products. The goods might be of higher value, and customers may be willing to pay more for them. Conversely, clients may feel that they cost too much and you may need to lower the price.
The system works by drawing in data from reports, surveys, demographic analyses, and sales feedback. It makes use of modern technological advances, such as big data, machine learning, and artificial intelligence, to aid you in deciding where to set the price. You’ll find a mix of tools working together for the best results.
Understanding which combination will suit your needs requires an assessment of your business type. For example, Business-to-Consumer (B2C) entities have silo price assessments with complex calculations for market-specific rates. The software analyzes buying behavior to gauge how sensitive buyers are to the current price.
Business-to-Business (B2B) models work differently. Product volumes are much lower than B2C companies, creating less information to analyze. It’s more challenging to study the other businesses’ purchasing patterns, which is why B2B entities target CPQ software more than price optimization software.
Benefits of Pricing Optimization Software
If you’re still on the fence about whether you should sign up for any of the best pricing optimization software we’ve listed, here are a few benefits to consider:
- Price consistency: The system’s automated functions ensure similar products have the same price range, avoiding client frustration at unjustified variances. It also prevents human error in entering the wrong unit figures and creating a massive discrepancy when clients place bulk orders.
- Bottom line growth: Since the software estimates the best price point that will appeal to potential buyers, you’re more likely to receive a boost in sales. You can align it to different campaigns, targeting specific clientele during seasonal occasions.
- Faster decision-making: Having all the latest facts at your disposal speeds up decision-making for the right price shifts. Automated recommendations mean cutting down on planning meetings or long-term manual labor.
- Streamlined processes: With your tasks running automatically, your team has more time to focus on the core business. Functions run more smoothly, while you retain your corporate image by altering prices at the right time.
- Aligns with corporate objectives:You can set category management settings to align with your business plan and goals. It usually deals with inventory management and promotions, but you can set the pricing software to align with your latest strategies.
Must-Have Features of Pricing Optimization Software
When you start hunting for the best pricing optimization software, be sure to look out for these features:
- Dynamic pricing: Markets change daily depending on several factors, such as stock availability, demand for services, and competitor rates. Dynamic pricing models contain algorithms that monitor market trends and automatically adjust your retail selling price accordingly.
- Competitor analysis: It’s healthy for any business to know what its opponents are up to in the industry. The best pricing optimization software comes with a tool that analyzes the current market prices and recommends whether you should raise or lower your rates.
- Predictive pricing models: It isn’t an easy task knowing the effect price changes will have on profit margins. Predictive pricing models solve this issue by calculating proposed rates and determining the possible influence on sales.
- Profitability analysis: Every company’s primary goal in the commercial sector is to make a profit. This tool helps you determine what your current income levels are and which outputs to alter for the best revenue based on current market trends.
- Custom pricing rules: This function comes into play when addressing specific client needs. It uses logic from the customer’s input to derive a new fee or rate, based on certain criteria.
The Cost of Pricing Optimization Software
We’ve seen many providers indicate that you’ll need to request a quote for a price plan. In these situations, there are several features you can select to build a custom setup. Therefore, the rate will depend on your choices.
There are plenty of monthly subscription options, which means that you’ll pay as long as you use the system. While some companies offer a flat rate, others have various plans you can choose based on your needs. We’ve seen costs of between $10 and $1,299 per month, which sometimes caters to a single user license instead of the entire business.