Moving from Excel-based pricing workflows to dynamic pricing takes more than simply upgrading your software to a new platform. The move impacts nearly every department within the organization, and requires C-Level sponsorship to succeed. More than simply impacting company pricing, dynamic pricing brings a cultural shift with it, as well as a significant IT commitment from the company.
Pricing strategy, employee roles, and process workflows all must evolve for the transformation to yield its benefits. However, when the dust has settled, and the new system is operational, the result is higher profit levels and a streamlined pricing process.
Before State – Manual Pricing Nightmare
Traditional pricing managers spend their day manually checking competitor pricing, reviewing cost of goods, and entering data into Excel. For businesses with thousands of available products, it’s a near-impossible task to manage every single item. As a result, high-selling items typically garner most of the attention, while lower-selling items aren’t ever optimized for price.
Pricing strategy plays a role, but because of the manual processes involved, it’s not applied evenly across all products and categories.
Additionally, pricing managers aren’t required to be particularly tech-savvy. If they can turn on a laptop, and enter some numbers into Excel, they have the technical know-how to complete their job.
Pricing Transformation – Cross Organization Effort
As mentioned earlier, adopting dynamic pricing and ushering in a dynamic transformation impacts the entire organization.
Your IT department will be the first to feel this project
While they can outsource much of the heavy lifting to system integrators, they will still need to be involved in overseeing the project. The way pricing is entered into the system will need to be reconfigured. E-commerce back ends will need to integrate with the pricing recommendation engine, while APIs connecting the pricing system to the online store need to be implemented.
Marketing needs to be trained as well, as dynamic prices can impact marketing strategies
For example, if the pricing team is committed to an Everyday Low Price strategy, the marketing team will want to build campaigns around the initiative. Finance, legal, and even customer service reps need to be brought up to speed, to understand the way prices change, as they analyze sales, ensure compliance, and provide customer support.
The pricing team will require the most training
For one thing, they’ll need product training to understand the capabilities and processes of the new system. But they’ll also need to understand the reasoning behind the transformation, and the way that their job will change. No longer tasked with spending the day looking at competitor pricing, their role will evolve into analyzing multiple reports, and reacting in real-time to market changes.
After State – AI Pricing Magic
With a dynamic pricing system in place, the role of pricing becomes more strategic and less mechanical
As an organization, you can develop new pricing strategies that govern your entire inventory, specific lines of business, or even individual products.
Pricing managers will have the time they need to study market trends and identify target markets. They can tweak strategies on different items, and oversee their entire inventory, rather than just the most popular products.
The company, in the meantime, will see improvements in their KPIs. A pricing strategy adjusted for increased profits will see their profits rise, while companies looking for increased market share will see their number of units sold go up.
The transformation from manual pricing to Ai pricing is as much cultural as it is functional. Companies that make this move find their performance levels increase, as do their profits.
