How to Effectively Manage Prices?

By Thomas Bennett Financial expert at Priceva
Published on September 8, 2023
In order to maximize profit and stay ahead of competitors, you need the ability to price at the most optimal level, and that requires an accurate pricing management system.

In today's ever-changing landscape, especially if you operate in a highly competitive market, it's critical to stay one step ahead of your competitors. A software solution for price management can help in this endeavor. It enables precise and swift control over all pricing data, thereby maximizing profit.
Here's what leading companies say about effective price management:
In modern goods and services markets, price is usually a parameter that creates intriguing opportunities.

To illustrate the strong influence of pricing on market volumes and share, Hermann Simon in his book "Price Management" provides the following arguments:

• In the consumer goods niche, price elasticity is typically 10–20 times higher than advertising elasticity and about 8 times higher than sales elasticity. This means the effect of a price change in percentage terms is 10–20 times stronger than the effect of a similar increase in the advertising budget, and 8 times stronger than the effect of a comparable change in the sales budget.
• A 30% increase in advertising spend is needed to offset a 1% price reduction.
• The level of price elasticity varies depending on the product category and the product itself.

Given the importance of effective price management, doesn't it seem illogical to still rely on manual competitor price monitoring and Excel spreadsheets for price management? The future profitability of your business could be at risk because this method has certainly become outdated.

Don't Rely on Spreadsheets for Price Management.

If your quotes and price lists are still manually created, you're jeopardizing accuracy, security, efficiency, and you're wasting much of your sales team's time while losing revenue.

Spreadsheets are always prone to human errors and, even more concerning, vulnerable to fraud. They are not designed for collaboration, they are unfit for flexible practices – and they are difficult to consolidate. They also fail to support rapid decision-making or business continuity.

Why Use Software for Price Management?

Implementation of Real-time Pricing

No more days or weeks spent on price administration. Changes in base prices, pricing rules, and promotional prices can be made in just minutes with the easy-to-use features of a price management system.

Accurate Pricing Decisions

With a clear analytic summary, it will be easier to foresee the impact of price changes on your business. It will be clearly visible where you're losing margin because products are priced too low, or where you're losing revenue because products are priced too high. Pricing monitoring and management software will precisely and clearly point this out.

Benefits of Pricing Automation

Let's consider the specific advantages that automation provides for pricing work, using the example of the Priceva monitoring and pricing service.

1. Allows Viewing Price Changes Dynamically

The main goal is to optimize your pricing decisions and be confident that you're achieving the highest possible price while maintaining revenue and profit growth. Since you have sales history at your fingertips, you can easily identify areas of margin leakage and perform price tests to find the optimal price. The pricing system will help you visually see on what dates significant price changes occurred for a specific product across all competitors.
You can then delve deeper to see exactly which competitors lowered their prices and by how much.

2. Allows Viewing Price Changes over a Historical Period of up to 90 days

The price monitoring service records daily price changes, giving you the ability to ask questions about what happened in the past, and to keep track of justifying individual price changes – something that's not possible when using Excel.

3. Abandon the 'Cost Plus' Pricing Approach

If you wish to leverage the advantages of applying diverse pricing strategies across various product segments, customers, and markets, then implementing pricing automation is essential. By stepping away from the antiquated and inefficient 'cost plus' approach, you're already on the path towards sales driven by a competitive pricing strategy, which, as statistics prove, fosters business growth.

4. Understand Your Competitors' Actions

You'll be able to receive your competitors' pricing as frequently as needed, with weekly, daily, or even hourly updates. This will enable you to compare all your product lines with your competitors' lines, providing a clear picture of your competitors' product range and its availability.

Mastering Pricing Gives You a Market Edge

No matter how sophisticated you believe your current pricing management system is, if you're still relying on spreadsheets, it has significant shortcomings. Outdated and inaccurate data about your competitors' pricing can adversely impact your profits. Delays in making pricing adjustments due to the lack of prompt information about market price changes could result in lost profits.

Pricing plays a critical role during periods when the market is undergoing serious changes and inflationary processes.

Automating price management allows you to make timely adjustments, reduce the number of errors, and make more effective decisions. This, in turn, provides greater control over pricing and a distinct competitive advantage.

Empower Your Business with Priceva's Price Tracking Solution
Take charge of your pricing strategy with Priceva's powerful price tracking tools.
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