December 18 by Michael Dunne
Pricing is of existential importance to firms, in ensuring sufficient returns are realized from the development, marketing and sales of products. When done right, it’s a key factor in helping firms survive and thrive. According to Gartner, a leading IT industry research house, effective pricing can increase margins by 50 basis points or more and increase revenues by 2 to 4%.
Unfortunately, excellence in pricing still remains largely confined to the realm of experts or specific industries. Innovation in how prices are set, communicated, administered, analyzed and refined on an ongoing basis, have not experienced broad base adoption in the corporate world.
Instead, many companies rely on pricing processes that are manual, or have gaps, where hand offs from one department to another are not always clearly defined. A bulk of the work is done in spreadsheets, which are easy to use but are designed for individual use, not enterprise-wide.
Then there are cultural issues. Sales is not always receptive to following new pricing, while partners enjoy even greater independence in practice, leaving the ability to enforce policies an open question. Similarly, pricing experts experience great difficulty in gaining timely feedback and visibility into traction of pricing methodologies, price actions or price lists in markets.
Configure Price Quote Software (CPQ) provides a means of getting the right pricing out to the masses more effectively, and delivering effective guidance and enforcement of policies. Moreover, outcomes can be measured across sales and buying cycles.
CPQ enables companies to systematically offer more choices to customers, whether in terms of permutations of specific products (like different options, subassemblies of components) or combinations of products (like product bundles) and services. And such product modifications can be scaled up and easily managed on a going basis, to support different ways of doing business, like e-commerce
and partner commerce.
From the start, innovative Configure Price Quote software should be able to handle pricing and promotional rules along with the conventional business constraints used to guide reps to the correct configuration of products. Corporations can then better manage product mixes in terms of calibrating pricing with product combinations, for servicing a range of different customer segments and markets.
CPQ becomes a central console, a corporate cockpit, for managing prices across channels, and enabling end-to-end process automation, from price setting, to publication and communication. All this can be done while reducing manual work and eliminating errors.
At the same time detailed information on transactions and customer relationships are automatically captured and made available to the pricing experts, to strengthen their pricing analysis. The same information can be used to drive renewals and ultimately a greater share of wallet with existing customers.
Improving pricing practices through Configure Price Quote software can be significant, including collapsing cycle times in selling and purchasing activities, while dramatically curtailing bad discounting. Conversely firms can increase both revenues, margins, the average size of new deals as well as renewal rates.
So CPQ plus pricing excellence translates into significantly higher sale effectiveness and efficiency. Meanwhile end-to-end automation of processes makes it dramatically easier for companies to orchestrate prices, promotions and product mixes across multiple sales channels.
To learn more about the competitive advantages of pricing excellence, watch the on-demand webinar Accelerate Pricing Excellence with CPQ, presented by the Professional Pricing Society.
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