It can be. But, as with most things in business, it depends. In this example below from an e-commerce company, cost makes up the starting point.
Pricing Simulation for sales people can be highly useful in many situations. It can help assess price increases, or simulate different profitability outcomes when applying different assumptions. It can also be useful when e.g. merging companies to see what different scenarios play out well for the merged company versus the customer.
In Mergers & Acquisitions it is common that several sales organizations are merged. The result is that people often need to sell new products or services, and that they need to negotiate prices and deliver value arguments that they are not familiar with. Here are 5 areas that can determine whether the pricing side of a M&A implementation is successful or not:
Our partners over at RevBeam wrote a great blog post today about how to make pricing the hero of an acquisition:
In some industries, if not most, prices have historically only been changed infrequently, but the emergence of Dynamic Pricing and the benefits it brings to sellers is changing that. Dynamic Pricing in itself is simply to update prices (more) frequently based on an underlying pricing model, in order to optimize prices in accordance with demand, competition, market conditions, customer willingness-to-pay and more.
Controlling revenue in B2B, as well as B2C, means being on top of what prices and discounts are offered to each customer.
Pricing in E-Commerce often involves updating thousands, if not hundreds of thousands of prices on a very frequent basis. While theoretically Microsoft Excel will hold over a million lines, in practice manual updates become very cumbersome and also miss out on a number of optimization options. This is where Price Management and Price Optimization software comes in.
Pricing in B2B sometimes including setting a Floor Price, i.e. a pocket price that sales people are not allowed to go below for a given customer, at least not without prior approval. They are usually internal numbers not shared with customers, for the obvious reason that any buyer worth his salt will immediately push for that price if he knew how low the sales executive is allowed to go. But what about what the sales person him or herself? Two main school of thoughts exist:
In business relations it is very much the norm that a variety of discounts or rebates are given to customers, which leads to that many customers have different pocket prices, or net net prices, after all those discounts. This is in itself a good thing, as it means that suppliers can differentiate discounting and final price paid, based on customer value and performance.
When it comes to implementing a dynamic pricing model in your business, once the model is established, the use of Price Management Software makes it much easier to run and update. Especially if your pricing requires on-demand pricing or very frequent updates (daily/weekly) across thousands of products.