When it comes to selecting a pricing software, the stakes couldn’t be higher. With nearly 40% of companies report using RFPs as a formalized part of their procurement process, especially in SaaS-driven industries, it’s clear that a well-crafted Request for Proposal (RFP) is a critical step in making the right choice.
In our recently published blog, we explored the key criteria for selecting the ideal pricing software, helping businesses identify the features and capabilities that align with their strategic goals. This time, we’re diving deeper into the practical side of the process: the specific functional requirements that must be included in your Request for Proposal (RFP).
This blog will serve as your comprehensive guide to ensuring your RFP sets the stage for selecting a software that maximizes profitability.
We’ll also share a separate blog covering all the must-have technological features in a pricing software—stay tuned!
Below is a detailed breakdown of the essential requirements to include in your RFP.
How Can I Ensure Effective Multi-Channel Pricing?
A pricing software must accommodate diverse sales channels to ensure consistency and precision across the board:
- Different Prices per Channel: Allow differentiation between online, in-store, multi-country, and multi-currency pricing.
- Dynamic Models for Each Channel: Implement channel-specific pricing strategies and adjustments.
- Unified View: Offer a holistic perspective of pricing across all channels to maintain transparency and alignment.
What Are the 11 Key Requirements for Building Pricing Strategies?
1. Dynamic Rule-Based Adjustments: Pricing rules automatically adjust based on predefined factors such as market conditions, inventory levels, and competitor prices.
2. Flexible Rule Creation and Modification: Superusers can easily create, customize, and modify pricing rules to fit evolving business needs.
3. Multi-Level Rule Application: Enable pricing rules to be applied at both individual SKU and logical Product Group levels.
4. Unlimited SKU Grouping: Provide unlimited options to group SKUs and apply different strategies, limits, and rounding rules to each group.
5. Override Capability with Audit Trails: Allow users to override pricing recommendations when setting the final price and include functionality to add explanatory notes for the override.
6. Rule Transparency: Clearly display the rules and logic used in generating price recommendations for user review and auditing.
7. Pre-Built Rule Library: Include an established library of common pricing rules to accelerate implementation and adoption.
8. Customizable Strategies: Offer high flexibility to design and implement unique, non-standard rule-based pricing strategies.
9. Complex Rounding Customization: Support advanced rounding rules tailored to specific business or regulatory requirements (e.g rounding based on category, brand or others that are not “off the shelf”).
10. Channel-Product Relationship Customization: Enable the creation of customized relationships between channels and products to reflect business-specific pricing strategies.
11. UI-Based Parameter Management: Provide an intuitive parameter sheet that allows users to modify pricing strategy parameters at category, brand, and channel levels directly from the user interface and not only through programming.
What Are the Key Requirements for Competitor Based Pricing in a Pricing Software?
Let’s be honest, no one dismisses competitor based pricing—it’s a key piece of the puzzle when it comes to staying competitive and winning customers.
Remember to keep these three requirements in your RFP:
1. Dynamic Notifications and Adjustments: Provide notifications or automatically adjust prices in response to competitor price changes.
2. Customizable Rules: Enable users to set competitor price matching rules at various levels, such as individual products, categories, or product lists.
3. Bulk Price Matching: Allow for the bulk matching of a large number of products, especially for private labels and branded items, to streamline operations and ensure consistency.
What Are the Requirements for Managing Promotional Pricing, Campaigns, and Discount Pricing?
When it comes to campaigns and discounts, a robust pricing software should offer the ability to seamlessly manage and track promotions, ensuring that all pricing adjustments align with ongoing campaigns. The system should not only handle internally managed promotions but also integrate with external campaign data, using it as an input to adjust prices dynamically.
What Should Your RFP Include for Demographic Pricing Capabilities?
Demographic pricing is essential for tailoring strategies to specific customer segments and geographic markets. Ensure your RFP includes the following requirements:
- Geographic Pricing Differentiation: The ability to create tailored pricing recommendations for the same SKU based on geographic location.
- Hierarchical Pricing Structure: Support for building hierarchies at the country, zone, and store levels to enable precise pricing adjustments.
- Store-Specific Pricing: Flexibility to set different prices for various stores based on factors such as local demographics or demand trends.
- Multi-Currency and Regulatory Compliance: Full support for multi-currency pricing and adherence to regulations specific to each country or region.
What RFP Requirements Should Address Inventory and Stock-Level Pricing?
Inventory management combined with effective pricing is crucial because it ensures that stock levels align with market demand, maximizing profitability while minimizing waste or overstocking.
Here are the inventory-related requirements that the pricing software must address:
Dynamic Pricing Based on Stock Levels: The software must enable dynamic pricing adjustments that reflect real-time inventory status, ensuring responsiveness to stock fluctuations.
Automated Markdown Capabilities: Support for automated markdowns on items nearing expiration or with low demand, helping to minimize losses and improve stock turnover.
High Stock Coverage Recommendations: The system should identify SKUs with high “Stock Coverage” (inventory levels compared to average daily sales) and recommend discounting or liquidation strategies to optimize inventory management.
Low Stock Coverage Premium Pricing: The software must recommend higher prices for SKUs with low “Stock Coverage” or limited supply, capitalizing on scarcity and maintaining profitability.
What AI Requirements Should Be Defined in Your Pricing Software RFP?
AI is everywhere today, transforming industries and becoming a buzzword in nearly every tech conversation. However, when it comes to pricing software, not all AI capabilities are created equal. Here’s what truly matters for AI in a pricing software.
Simulation Tools: The software should include simulation capabilities to test various pricing strategies, margin limits, and predict key performance indicators (KPIs) such as revenue, unit sales, and profit.
Sales Data Integration: Ensure integration with sales data to track the impact of past price adjustments and refine future recommendations.
Price Elasticity Analysis: Leverage SKU-level price elasticity data to influence price recommendations and optimize margins.
Competitor Sensitivity Identification: Identify key competitors that influence pricing decisions, allowing for strategic adjustments based on market dynamics.
Product Segmentation: Group products into categories such as Key Value Items (KVIs), sales drivers, and profit generators using a scoring model based on factors like price elasticity, competitive dynamics, basket-opening rates, and purchase frequency.
Which Reports Are Essential in a Pricing Software?
Reports and dashboards are essential for transforming raw data into actionable insights, enabling businesses to make informed decisions quickly.
A pricing software must include built-in, user-friendly dashboards and reports that are easily accessible to end users. Standard reporting capabilities should cover critical areas such as historical price levels for each SKU, competitor pricing trends, and sales velocity across various groupings and channels. Additionally, the software should support scenario analysis, allowing users to evaluate the effectiveness of different pricing strategies on total sales, margin, and profitability. Customization is also key—the ability to add widgets and graphs at the product level ensures that reports are tailored to unique business needs.
Key Takeaways
Key takeaways from the blog include ensuring your pricing software supports multi-channel pricing, flexible rule-based adjustments, real-time competitor pricing and seamless promotional pricing management. It should also enable demographic-specific pricing, inventory-based pricing strategies, and AI-driven insights like simulations and elasticity analysis.
Defining an RFP can be a complex process, but you don’t have to do it alone. Our experts are here to guide, ensuring your RFP covers all the critical requirements for selecting the ideal pricing software.
