Price Setting Value for Users

The Price Setting functionality helps to define and manage pricing strategy, providing the tools to calculate, simulate and publish all your product prices. 

The module supports price policy definition, setup of price guidelines, calculations, and simulations of gross, special, and net prices including algorithmic optimization, as well as the rule-based or manual approval of price calculation results.

Typical Business Challenges in Price Settings

• Slow and laborious mass price updates that occupy the pricing team for weeks

• Slow response to changes in cost, competition, and demand

• Reducing profit margins resulting from uncontrolled and inconsistent discounting practices

• Difficulty managing increasingly complex pricing strategy, rules, and guidelines

Typical User Scenarios for Solving Challenges

The module can be used for the following scenarios: 

• Setting up the rules for price calculation on the basis of different data, parameters, and segmentation (region, type of customer, type of product).

• Automated price lists creation on the base of defined rules.

• Automated recalculation on the basis of changed data, like competition, cost, stock, market index, etc.

• Approval workflows and approval thresholds for final prices that are not aligned with company targets.

• Different price calculation logics depend on the region, customer, or product.

Price Setting Key Functionality

Price Builder contains three sections to explore: Price Lists, Live Price Grids, and Simulations. 

Pricelists

When to use it? → Pricelists are typically used for price setting where prices are not changing very frequently and revisions need to be created on a quarterly/half-yearly basis. It is also a tool for creating different pricelists on the base of the region, product, or customer. Primarily used by B2B businesses.

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How does it work? → A Price List is a set of products with a calculated price – the result price. The result price is calculated based on a  logic that contains a set of price calculations rules. All the information that is used in the logic to calculate results is displayed in the table format and can be filtered. The Pricelist can be automatically approved if the approval rules are met or require additional approval steps. If the Pricelist has been approved then no further modification can be done, so the pricing manager will need to create a revision if some of the input data for calculations have been changed.

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Typical business scenarios:

Scenario #1: The company has distributors of the product and reviews the prices quarterly. The pricelists need to have a target and end date. Once the revision process is finished, old pricelists are superseded by the new pricelists that are then sent to distributors.

Scenario #2: The company resells the products to other businesses and calculated the prices depending on the country and product group. There are different price lists for different countries and they are updated on year to year basis.

To see PriceLists in action, check our video tutorials.

Live Price Grids 

When to use it? → Live Price Grids (LPG) are typically used when a large number of products need to be priced and the prices need to be updated frequently. Companies that want to pursue dynamic pricing strategies usually work with LPGs. Mixed-use of B2B and B2C businesses.

How does it work? → The Live Price Grid has a logic, set of rules on how prices are calculated, the outputs of which can be visible in the form of a table. The working principle is very similar to Pricelists. The main difference is that there is a possibility to approve prices directly in LPG as well as manually overwrite the price. The prices can be automatically approved on the base of a set of rules and the items that have not been verified for automatic approval then will be sent for manual revision of the pricing manager.

Typical business scenarios:

Scenario #1: The company is selling computers via an online shop and orients ist pricing on the base of competition price, inventory, and product life cycle. Separate items that receive new data during a certain period of time need to have a price recalculated.

Scenario #2: In the B2B area LPGs are commonly used when competition data is applied or market index data that is changing and affecting pricing.

To see Pricelists in action, check our video tutorials.

Simulations

When to use it? → When pricing managers want to see the impact of, for example, target margin change on the final price, they work with Simulations. This functional area offers to use existing Pricelists or Live Price Grids to simulate some changes which will be then underlined by dedicated columns within the simulated Pricelist.

How does it work? → To create simulation, there should be approved Pricelist or Live Price Grid as well as changed data input, e.g. table with data for simulation which will be taken into consideration by the calculation rules. Once the calculation of the simulated pricelist has been finished, the pricing manager can review the delta columns and analyze the impact of the change.

Typical business scenario:

The product/customer price adjustments need to be changed and we want to see the impact on the resulting price before changing/reviewing existing pricelists.

Getting Started with Price Setting

Pricefx offers Accelerate Price Setting Package that can help to start using tool capabilities faster than the traditional implementation approach.

The package is used for Price Lists or Live Price Grid price-setting / management and supports standard Price List, Global and Country Price List management, and headquarters and Country Price Lists.

The package provides several "built-in" Price Strategies:

• Competition Based Pricing

• RRP (Recommended Retail Price)

• Promotion Pricing

• Cost Plus

• Price Increase

• Value-Based Pricing

Implementation Examples

Consumer Electronics - 30 million prices recalculation and distribution, global competition-based pricing strategy, instant prices export.

Food & Beverage - managing complex pricelist creation and approval process, analytical insights with simulation, data changes monitoring.