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How to Iron Out Your Pricing Strategy

Thu, May 17, 2018

Complex pricing can often become an unnecessary and frustrating hurdle if not properly managed, causing sales invoices to frequently end up with incorrect pricing or negative margins.

This complexity can also derail the best of pricing strategies, however a price strategy should be even more important if you are immersed in many complex price scenarios.

Download Guide: How to Develop Your Pricing Strategy (including free worksheet)

Tailored trading terms; free goods; volume break pricing; various creative trade promotions that encourage volume purchases like mix and match, these have become just some of the ways to add complexity to pricing.

However, complex pricing wasn’t always so complex. And it doesn’t need to stay that way. 

So how do we get back that simplicity without sacrificing the advancements we have made in the processes?

To make your task easy, we have broken it down into a few steps, allowing you to isolate and individually target pain points.

Centralise pricing back to one price list

Firstly, you can simplify your complex pricing by centralising all your pricing back to one price list.

It sounds simple, but companies can often get so caught up in the complexity of current pricing that they replicate price lists for each client.

This will allow you to have a single starting point from which to build and calculate all your further pricing discounts and build a sound pricing strategy.

Say goodbye to Excel

pricing strategy illustration

This should then be followed by eliminating spreadsheets.

Most businesses we encounter use Excel to do all of their pricing, rebates and discount calculations.

This might work for small businesses, but if you want your business to grow, you will need to be able to implement price management software that will allow room for growth and flexibility. 

With most pricing models, you start with your list price, but as each new client is added - with their own separate trade agreements – these additions and allocated discounts can become too much for Excel to handle.

Use a price model to give yourself the flexibility you need

To get visibility and ease of understanding when it comes to discounts and pricing levels, it is critical to implement a price model.

A price model will allow you to streamline and simplify these pricing stages, giving you the ability to shape your pricing according to your business requirements.

It takes this single list price source which you’ve implemented that gives you a consistent foundation upon which to build any discounts, price breaks and up-charges. Allowing you to get to a net price that is both sustainable and profitable.

Decouple pricing from your ERP or financial system

You also want to ensure that your pricing is decoupled from your ERP or financial system.

Your pricing needs to be a standalone, best of breed technology solution built to simplify pricing. Since ERPs don’t allow for much pricing flexibility, decoupling pricing is the most effective solution to trouble free pricing management.

Use a reputable pricing software solution

Which leads us onto our last (and probably most important) point: implementing best-of-breed software.

You want to use pricing software that can help you easily and seamlessly execute accurate prices from your ERP whilst retaining the flexibility to handle the various pricing and promotions which you want to offer and make available to clients.

It allows your discounts to float, always ensuring the best discount is applied while retaining financial visibility.

Flintfox’s RMx Pricing and Promotion Management software allows not only for visibility down to list price but also retains the ability to calculate over a million prices in under a minute.

Gone are the masses of price lists to manage and maintain, welcome to a solution to build your price strategy and calculate accurate prices instantly!

pricing strategy guide

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