Choosing the right pricing software is one of the most important decisions a business can make. Whether you’re moving on from Excel-based tools or replacing an outdated system, a modern pricing software has the potential to transform your approach to pricing. It can improve profitability, streamline operations, and help you stay competitive in the fast-moving retail and e-commerce world. In this blog, we’ll walk you through a structured way to make this decision, drawing on insights from pricing experts Dr. Fabian Uhrich and Dr. Markus Husemann Kopetzky.
If you’d like to explore these tips in a more groovy way, You’re invited to watch this video and learn How Retail and eCommerce Firms Achieve Price Optimization.
7 Key Factors to Consider When Choosing the Best Pricing Software
1. Evaluating Business Needs for a Pricing Software
When selecting a pricing software, the first and most crucial step is ensuring it aligns with your specific business needs and provides the right functionality. Start by pinpointing your pricing challenges. These might include managing dynamic pricing, implementing various pricing strategies, balancing profitability with competitive pricing, forecasting demand, applying omnichannel pricing, analyzing competitor prices, or optimizing inventory levels. The software you choose should empower you to address these issues effectively. If the software uses AI to tackle these challenges, that’s a significant advantage. Even better is when the AI’s decisions are transparent and easy to understand, rather than a “black box.”
When assessing a software, consider its ability to meet functional requirements (e.g., an open software that supports diverse pricing strategies, integrates seamlessly with omnichannel operations, and incorporates price elasticity) and solve specific use cases (e.g., maintaining profitability while remaining highly competitive in a specific market).
Since every business has its own unique needs, it’s essential to clearly define your company’s requirements and priorities before evaluating potential softwares. This ensures you choose a solution that fits your objectives and sets your business up for success.
2. Technical Requirements for a Pricing Software
The second crucial criterion for selecting a pricing software is evaluating its compatibility with your existing infrastructure and company architecture. A suitable software should integrate seamlessly with your current systems, such as ERP solutions (e.g., SAP) and e-commerce software (e.g., Shopify).
Equally important are the software’s technical and non-functional requirements, which ensure smooth operation and scalability. These should include, but are not limited to:
- Security: Robust measures to protect sensitive pricing and customer data, including Single Sign-On (SSO) and Multi-Factor Authentication (MFA).
- Performance & Capacity: Ability to handle large volumes of data and transactions efficiently and other factors such as loading time and reactivity.
- Documentation: Comprehensive documentation and reporting to provide users with clear and actionable overviews (e.g. historical tracking and scenario-based reporting)
- Scalability: Enable multi-channel support functions and accommodate growth, whether its product catalogs, new geographies, or opening more stores.
- Availability: A reliable pricing software needs to be dependable, with uptime guarantees of 99% or higher. This ensures the system is always available when your business needs it.
- Accounting: Ensures financial accuracy and regulatory requirements with transparency and traceability at the forefront.
- Error Handling: Clear visibility for spotting and tracking errors, so issues can be resolved quickly and not trigger business interruptions.
- Architecture: Opt for SaaS-based software to simplify maintenance and reduce reliance on specific personnel to ensure flexibility and scalability
- Audit & Compliance: Keeping a comprehensive record of all actions and changes ensures transparency and makes it easy to trace any issues.
These requirements aren’t one-size-fits-all. A multi-billion-dollar retail business and a $50 million e-commerce company will have very different priorities when it comes to pricing software. Understanding your unique needs is key to choosing the right solution for your business.
Explore here the full list of technical features to consider when selecting the right pricing software for your team.
3. Financial Criteria for Selecting a Pricing Software
The third critical factor in selecting a pricing software is understanding its financial impact. This means looking beyond just the cost of the software—both initial implementation expenses and ongoing SaaS subscription fees—and considering the value it will bring to your business. Ask yourself: How much additional revenue could the software help generate? Will it improve gross profit margins? What is the expected return on investment, and how long will it take to achieve it?
It’s also important to weigh the costs and benefits of building a custom in-house solution versus purchasing an existing software. This analysis should include opportunity costs—what other projects might be delayed or abandoned if resources are allocated to developing a software internally. A comprehensive financial evaluation ensures the solution you choose is both cost-effective and delivers measurable results.
What are the Financial Criteria for Selecting a Pricing Software?
- Ongoing Costs: The recurring expenses associated with the software, including maintenance and support.
- Total Implementation Costs: All upfront expenses involved in getting the software operational.
- Cost Savings: Potential reductions in costs compared to the expenses of maintaining and further developing your current software, and reductions in manual effort through automating the company’s pricing processes.
- Payback Period: The time it will take for the software to pay for itself through increased revenue or cost savings.
- Financial Model: How the software’s costs will be financed and recorded. Some payments may be capitalized on the balance sheet, while others might be expensed within a given period.
What Factors Should You Consider When Deciding to Build a Pricing Software In-House?
- Relative Implementation Costs: How much time and effort does the internal team require that builds a pricing software the first time compared to implementing an existing solution?
- Opportunity Costs: Given that software development resources are scarce, what is the forgone value of not delivering other projects because these resources were allocated to the pricing project?
- Price Optimization: Assuming the internal development team requires more time to implement the pricing solution than the external pricing software, how much money was left on the table due to delayed price optimization?
- Development Costs: External pricing software develops its products further and spreads the costs across its customer base. What budget difference do you need to accept for your in-house solution?
By considering these criteria, you can ensure that your chosen pricing software is a sound financial investment that drives tangible value for your business.
4. How Should You Select the Right Vendor for Your Pricing Software?
The fourth key criterion in choosing a pricing software is evaluating the vendor behind it. Understanding the vendor’s experience and expertise is crucial to ensuring a successful partnership. Look into whether their software has been implemented successfully in companies within your industry and assess the breadth of industries they serve. A vendor with strong retail expertise can provide tailored insights and solutions specific to your needs. Additionally, consider whether they are innovative and incorporate advanced technologies like AI to offer cutting-edge capabilities. A strong vendor combines deep industry knowledge with a forward-thinking approach.
However, the vendor selecting is not only about experience and innovation but also about being a customer centric vendor. Forbes suggests that Digital transformations fail because the vendors are losing sight of what actually matters: their client’s needs. So having a vendor that is highly focused on understanding and addressing your specific business challenges can make all the difference.
What are the Key Criteria to Consider?
Investment Risk: Choose a retail pricing software vendor with an established track record—ideally one that has been operating for at least 4-5 years and has active paying customers. This helps minimize risk and ensures the vendor has a proven solution.
Project Team: Evaluate the team’s experience in implementing pricing optimization software. What kinds of projects have they worked on? Do they have experience with retail or DTC brands in your vertical? Also, assess their ability to innovate—are they creative, proactive, and able to anticipate future needs? Remember, you’re investing not just in the current implementation but also in the vendor’s ability to deliver on future projects.
Collaboration between the pricing software team and your internal team is critical to success. While it’s challenging to evaluate a vendor’s team before implementation, the RFI or RFP process can offer clues. Pay attention to the level of interaction during these phases—do they ask thoughtful, customized questions? Are their workshops tailored to your specific needs? How much effort do they invest in understanding your business, even without a guarantee they’ll win your project?
Many companies overlook these factors and focus solely on a list of functionalities. Instead, consider what makes an ideal partner and include these criteria in your evaluation process.
References: Blind references are often the most reliable. Speak with active clients who use the software to get honest feedback about both the product and the implementation process. If blind references are unavailable, ask the vendor directly for references to gather insights into their capabilities.
5. What Are the Risks Involved in Implementing a Pricing Software?
The fifth key consideration when selecting a pricing software is understanding and managing the risks involved in its implementation. It’s essential to evaluate whether the software can be realistically implemented within the required timeframe and if your organization has the necessary resources to support the process effectively. Iseo Blue Research suggests that only 34% of the projects are completed on time. Potential risks, such as delays, misaligned internal teams, or unforeseen technical challenges, should be identified early, with contingency plans in place to address them.
You should also prepare for the possibility that the software’s initial pricing recommendations might not deliver the expected outcomes. Establish a framework to monitor, adjust, and optimize the software’s performance post-implementation to ensure long-term success. Taking a proactive approach to risk management can help your organization navigate challenges smoothly and minimize disruptions.
Key Criteria to Assess Implementation Risk:
Feasibility: Assess the likelihood of the project being successfully completed. Are the goals realistic, given the scope, timeline, and resources available?
Resources: Consider whether your team and the vendor have the capacity, expertise, and tools needed to meet the project’s requirements.
Documentation Requirements: Evaluate the need for detailed documentation of APIs, processes, and security protocols to ensure compliance and smooth integration.
6. Where to Source Information for Evaluating a Pricing Software
Once you’ve outlined the categories and criteria for evaluation, the next step is determining where to source the information for each. For most criteria, the RFI (Request for Information) process will be the primary resource. However, not all insights can be gathered this way.
For example, some details will come from demo calls, where you can see the software in action and ask specific questions. For each category and criterion, identify the most appropriate source to ensure you’re making informed decisions based on comprehensive and accurate data.
By considering these factors and gathering information strategically, you can reduce implementation risks and select a pricing software that aligns with your organization’s needs and goals.
7. How Should You Evaluate Different Pricing Software?
The final step would be to evaluate the solutions. For every criterion, you need to define ex-ante, which performance standard would correspond to a score of 3 (great), 2 (medium), or 1. Some of the criteria should be a “must have,” so if the pricing software does not deliver this feature, the client cannot consider them (e.g. can this pricing software be integrated to your current systems or not).
It is recommended that you also define the weights for each criterion in advance and agree on the (1) evaluation matrix (i.e., scores) and (2) weights for each criterion with the relevant stakeholders.
Lastly, you put all of the dynamic pricing softwares on one sheet and compare their scores.
Good luck with your evaluation processes. If you need assistance with conducting your RfP processes, please reach out.
Key Takeaways
Selecting the right pricing software is a significant decision for any business. It’s not just about the features—it’s about finding a solution that fits your business goals, makes financial sense, and comes from a vendor you can trust. You’ll also need to think about how easy it will be to integrate with your current systems, whether it can grow with your business, and if it meets necessary compliance standards like SOX.
To make the best choice, take the time to organize your priorities and gather information from different sources like RFIs, product demos, and client testimonials. By doing this, you’ll be able to make a well-informed decision and choose a software that not only solves your immediate needs but also supports your long-term success.
About Dr. Fabian Uhrich, CPO at Quicklizard
Dr. Fabian Uhrich is Quicklizard’s Chief Product Officer and a recognized leader in retail pricing and pricing strategy. Before joining Quicklizard, he worked as a Partner and Global Pricing Expert at Boston Consulting Group, where he helped major companies implement innovative pricing solutions. At Zooplus, Europe’s largest online retailer for pet supplies, he led pricing and online marketing efforts, driving key transformations in the e-commerce space.
With a Ph.D. in Behavioral Pricing from TU Munich, Dr. Uhrich combines academic expertise with hands-on industry experience. He also lectures on pricing at ETH Zurich, sharing his deep knowledge with future leaders in the field. His career reflects a unique blend of strategic insight and practical know-how, making him a trusted voice in pricing innovation.
About Dr. Markus Husemann-Kopetzky
Dr. Markus Husemann-Kopetzky is the founder of the Pricing Management Institute (PMI) and has over 10 years of experience helping businesses improve their pricing strategies and profitability. He has worked with companies of all sizes across a range of industries, giving him a deep understanding of what works in practice.
Alongside his consulting work, Markus contributes to pricing research as a guest researcher at Freie Universität Berlin and has published widely in top journals and books.
Pol Vanaerde, president of the European Pricing software, has described Markus as “…one of the most important pricing influencers in Europe.” His ability to take complex pricing concepts and turn them into clear, actionable strategies has made him a key figure in the field of pricing.
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