It is surprising how many organizations and leaders consider digital pricing transformation merely as an automation project and measure ROI in terms of only process improvement and resulting efficiency gains.
When done right and managed correctly, digitizing your pricing processes, can be more strategic in nature with direct impact on bottom line.
To get the most out of Digital Pricing Transformation, leaders and decision makers in organizations must begin by identifying core pricing issues, pricing processes they want to be included in the digital transformation exercise, assess existing tools, and define pricing systems that meet their unique pricing requirements.
For a Digital Pricing Transformation to be effective, the to-be/post transformation state must be thought of as a redesign of the whole pricing process and not just introduction of new, improved digital pricing tools.
Evaluating the Right Pricing Technology Tools
Once the pricing requirements are finalized and the gap between, as-is and to-be pricing process identified, digital pricing transformation of one or more than one pricing process can be taken up, based on urgency and perceived value of the process (and gains post digitization) to the customer’s buying experience.
By taking a holistic approach to the entire process, organizations can quickly capture significant margin improvements.
Typically, Digital Pricing Transformations, encompass one or more of the following:
Price Setting: Price setting is the crucial link between price strategy and execution. It encompasses all activities that translate strategy to tangible instructions for price execution. This includes defining pricing policy, setting up discounts based on pricing segments, discount tiers, benchmarking against competitor prices etc. A good price setting tool allows users to easily and intuitively to align pricing strategies with market conditions and internal business goals.
Optimized Price Recommendation: Setting the right prices, and ensuring the right price is paid in each transaction–is driven by data and not by intuition. A good Price Guidance tool allows leverages not only transaction data, but advanced AI driven algorithms to identify the best price that deliver on margin and volume goals.
Price Management: Price management typically encompasses all activities that deal with managing any and all information that is used in the pricing process. A surprisingly high number of Pricing teams, even those within Fortune 500 companies, still rely on excel spreadsheets for this. While Excel is a good starting point, it cannot be a substitute for a central digital repository of all pricing information. A central pricing repository, allows everyone in the organization to have a “single source of truth” when it comes to pricing related data. A good Price Management tool allows you to reduce administrative hours, eliminate non-value add activities, and drive transparency across the value chain.
Price Tracking/Analytics: Executing Optimized Pricing is not good enough. To enable a closed loop pricing process, that continuously learns from Pricing actions, its important to track Price Effectiveness in the market and course correct based on outcome. Digital Pricing Transformation is incomplete, if users do have the right set of Pricing Analytics tool to visualize data, not only at the point of decision-making, to make data-driven decisions more quickly, but also allows users to quantify the impact the price change and make updates to pricing policy based on changes in market.
Selecting The Right Digital Pricing Transformation Partner
Before evaluating and selecting pricing tools and technology, its imperative for decision makers to define the organization’s needs as a function of customer value.
Organizations that view Digital Pricing Transformation as an enabler of ‘value to customer’, typically report ROI within the first year of implementation.
For more than 20 years, Vistaar has been the trusted Digital Pricing Transformation partner for some of the biggest, most recognizable names in global business
Talk to us to know how Vistaar can help you better manage your pricing.