Pricing and Profitability Management: A Practical Guide for Business Leaders

What Is Pricing Software?

Pricing software is basically any commercially available application containing tools to automate pricing analytics, optimization, and execution to help organizations in their efforts to make efficient, effective pricing decisions. Organizations are increasingly looking for ways to integrate these applications into their existing technology infrastructure to help ensure that the improvements implemented by management are sustainable over the long term.

Standard Functionality

Pricing software solutions address four distinct areas of functionality. The first one focuses on analysis and the three others are process oriented:

1. Pricing Analytics allow finance, marketing, sales, and pricing professionals to perform real-time assessments of customer, product, marketing, and pricing data to inform decision makers of trends and opportunities. Key areas of functionality are:

• waterfalls and scatter plots to provide a view of price and margin performance
• profit potential and business risk assessments across segments
• segmentation analysis to support differentiated pricing
• dashboards and alerts to monitor pricing activity
• simulation programs to define and run pricing scenarios.

2. Pricing Optimization implements mathematical and statistical methods to help calculate recommended prices for a product or service. Key areas of functionality are:

• managing inputs from multiple internal and external economic sources
• analyzing defined microsegments within a given market ...