Best Pricing Software in Comparison

Pricing Tools Definition: What Is Pricing Software?

Pricing tools are fundamentally used to determine the optimal price for products. Therefore, they are also referred to as price optimization software. Relevant solutions offer various functions that, in particular, allow sales teams to determine customer-specific prices as well as discounts and rebates. Pricing tools typically include data analysis functions that can track the impact of pricing strategies on sales profitability. Ultimately, this enables companies to increase their profit margins or the margins of their businesses.

Why should companies use a price analysis tool?

In almost every area today, there is a wide range of alternatives for products that serve the same purpose. In the online market, (potential) customers can comparatively quickly and easily compare costs. They usually end up choosing the solution with the best price-performance ratio.

For companies, this means an increased relevance of flexible, customer-specific pricing. Appropriate price control can often only be achieved with specific technologies. After all, online shops often deal with hundreds or thousands of offers, the prices of which responsible parties must optimally align. Doing this manually would hardly be possible and in any case, would be highly inefficient.

Price management software helps those responsible with such to-dos. With the help of such programs, it is possible to organize, track, and even automate various price actions. They allow a market-accurate determination of prices without losing margins. The effort is generally insignificantly small.

How do pricing tools work?

How pricing tools work obviously depends on what features they come with. Price optimization software can provide much more than just "maintaining" a list of sales prices for the products offered. Relevant solutions offer timely, automated updates, support special cases, and provide insights into price development. The following functions are typical:

• Custom pricing: Pricing software always includes functions that allow sales staff to set custom prices for individual customers or customer categories. This is usually based on specific factors such as volume, demand, payment conditions, contract conditions, customer value, and/or sales targets.

• Price optimization: Pricing tools generally offer analysis tools that help sales staff determine the best pricing strategy. The basis for this is the factors already mentioned above. They help sales estimate the profitability of each sale, each product line, each customer category, etc.

• Integrations: Pricing tools are often integrable with other customer-specific solutions, such as an ERP and/or CRM system. E-commerce, CPQ, and retail software can also usually be connected. Thus, a more holistic pricing process is enabled. Relevant strategies can be implemented immediately and with numerous data. By integrating with a CRM, price management software can, for example, create an individual offer and automatically enter the information into the respective CRM.

• Strategic support: Some pricing tools are specifically aimed at optimizing profit margins or automating price updates. Such processes are triggered depending on market conditions. Alternatively, they are based on the analysis of customer data. The main goal here is to prevent companies from wasting time and money on goods or services that are not selling. By quantifying relevant information, software can enable companies to better align their business with their customers. Other companies – typically manufacturers – focus more on cost modeling and providing cost transparency. This can help a brand predict the price structure immediately and thus give the sales team a head start.

• Support for multiple currencies: Some pricing tools offer support for multiple currencies. Such functionality enables companies that operate internationally to easily and efficiently organize prices for foreign countries.

• Competitor analysis: More and more companies have to assert themselves in fiercely contested markets. In this context, it is important to keep an eye on competitors' prices. Some pricing tool software includes features that allow those responsible to evaluate price data from their competitors' websites. If companies know the product costs of their main competition, they can naturally set their own prices more effectively.

What are the advantages and disadvantages of pricing tools?

The three main advantages of pricing software are:

• Centralization of data sets: For many companies, the main advantage of pricing tools is not the achievable price optimization itself, but the centralization of relevant data. Under their use, there is a single data source that is used daily for various typical pricing tasks and relevant analyses. Moreover, price software can be very helpful based on the data to organize products or services for sale beyond mere cost calculation. For example, product groups can be identified for which the same price ranges and prospects apply due to similar characteristics. Additionally, pricing software identifies customer segments with similar purchasing behavior, to whom the same marketing campaigns are directed. Furthermore, data-based automation enables typical analyses to be repeated in order to accelerate numerous internal processes.

• Price optimization: Pricing tools offer useful price calculations based on analysis. By using relevant analytics tools, those responsible can identify both potentials and losses without having to wait for the usual monthly or quarterly periods. The pricing strategy can thus be corrected very quickly and accurately, which can ultimately increase overall profit.

• Planning for price changes: Companies pursuing a specific pricing strategy generally need to closely monitor their market and anticipate the impact of price changes, advertising campaigns, etc. Specific forecasting models, which can be provided with the help of pricing software, are very helpful in this regard. Detailed insight into current processes is possible. Relevant information is then extremely useful for planning advantageous price changes.

Are there any disadvantages given these clear advantages? Indeed, as with practically any software, certain challenges can arise when using a pricing tool. Typical difficulties are:

• Costs: Pricing software only makes sense if its costs do not eat up the profit margin achieved. Some price design programs offer standard and premium versions. The premium packages naturally come with more functions, but they are also more expensive. Every month, there may be considerable additional costs. Therefore, it is very important to carefully weigh up the range of functions that your own company needs. Those responsible should ultimately opt for a solution that meets their requirements as precisely as possible but does not exceed them.

• Integration issues: Every time software needs to be integrated with other software, certain problems can arise. First of all, a pricing tool should of course be compatible with the software architecture into which it is integrated. But even then, inexperienced users sometimes have difficulties connecting them properly. To make the process as simple as possible, a program with user-friendly implementation processes should be chosen. Additional services for integration, provided by the vendor's specialists, can also be helpful. In general, prospective buyers should pay attention to good or comprehensive support.

How do I choose the right pricing tool?

Purchasing pricing software can significantly influence the revenue of your own business and involve a considerable investment. Therefore, those interested are well advised to choose a solution that perfectly matches their requirements. The following five factors or questions are particularly important in this context.

1. Does the pricing software meet all given requirements?

When comparing price design software options, those interested should pay attention from the start that the solutions they are considering bring all the functions they need. The features should be aligned as precisely as possible with their own business.

Regardless of whether it is a production or a trading company, it is a great advantage to have a pricing software provider on board who has experience in the respective industry. Optimal results can only be achieved if special needs are best covered.

Furthermore, there are specific types of pricing tools that are focused on certain tasks. For example, it is pointless to consider price design software that focuses exclusively on CPQs (Configure-Price-Quote - Individual Offers) if you are running a retail business that sells only standard products to customers.

Requesting a free demo version is an excellent way to determine whether the functionality of the price software meets your own business objectives. However, those interested should be clear in advance about what they want and how their company will benefit from the solution. It is also important to ensure that all necessary resources (including the IT department) are available to maximize the features on the wish list.

2. Is the price software I have chosen future-proof?

Before purchasing a pricing tool, those responsible should be clear about how the business objectives of their company might change over the next two to five years.

When selecting a pricing software, it is important to thoroughly examine your options for expansion possibilities. Ideally, a solution will be chosen that offers long-term advantages to your own company through regular updates and flexible expandability.

For example, at the beginning of using such a tool, a general improvement in pricing can have top priority. But in three to five years, when the company expands internationally, regionalized pricing strategies may also need to be applied.

In this context, it often makes sense to choose price software that represents a flexible overall solution. Simply integrating individual components might create barriers. Then, software breaks have to be accepted. Generally, it is always more efficient to update price software over time than to purchase a completely new solution when requirements expand.

3. Can the pricing software be integrated into my existing system?

Salespeople and other responsible parties who are usually familiar with pricing management in a company have a variety of tasks to perform. However, if price optimization software is not currently being used, the probability is high that other systems related to price design are being used. Maybe the price design team is overwhelmed because it is making stacks of manual price entries in Excel spreadsheets. Or it is suffering from "tool fatigue" because it is simply using too many individual systems to track prices, customers, regionalities, logistics, etc.

A pricing tool can help remedy such deficiencies. Ideally, it enables comprehensive data integration with the existing software architecture.

Regardless of the respective business model and individual data sets, those interested should consider how many other systems they will have to integrate the contemplated solution with, now and in the future.

4. Do I want to be autarkic or work more closely with a vendor company for pricing software?

To handle all pricing processes completely independently with the help of software is no problem, thanks to many user-friendly solutions on the market. Companies, or the responsible parties, can thus maintain full control over their processes and relevant data.

However, in some cases it makes sense to choose a program that offers more extensive support from the developer company. Especially when important personnel resources are missing, such an application should at least be considered. Interested parties can receive various assistance here - from simple implementation support to extensive strategic processes.

If additional services are an option or are needed, those responsible should check exactly where they are getting what they need. Price design software providers normally present themselves as consulting companies when corresponding opportunities exist.

5. Does the culture of the provider fit with that of my company?

Many software applications for price design are designed for general rather than specific requirements. Accordingly, the organizations behind them should provide a broadly positioned service that is very suitable for many. But that does not mean that they all fit in with your own business.

Creating prices and relevant data are indeed critical issues. Therefore, a lot of trust should be the basis for fully leveraging a pricing tool without worries.

What do pricing tools cost?

What a pricing tool costs is primarily dependent on the following factors:

• The cost is determined by the complexity of the pricing processes to be carried out.
• The more extensive and deep the tool's analytics, the more expensive the solution.
• Tools with many and/or flexible integration points are typically quite costly.
• Implementation services and other additional services incur additional costs.

Some pricing software is even completely free of charge. Here, there are usually only a limited range of functions. Better-equipped solutions are available between 50 and 100 euros per month. A custom-tailored tool can quickly demand a six-figure investment, including implementation.