Table of Contents
What value does Price Setting provide to 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.
What typical challenges business users face in price setting?
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 the challenges
The module can be used for the following scenarios:
Setting up the rules for price calculation on base of different data, parameters and segmentation (region, type of customer, type of product).
Automated price lists creation on base of defined rules.
Automated recalculation on base 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 depending 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? Pricelist are typically used for price setting where prices are not changing very frequently and revisions need to be created on quarterly/half-yearly basis. It also a tool for creating different pricelists on base of region, product or customer. Primarily used by B2B businesses.
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 which contains set of price calculations rules. All the information that is used in the logic to calculate result 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 step. If the Pricelist has been approved than no further modification can be done, so pricing manager will need to create a revision if some of the input data for calculations has been changed.
Typical business scenarios:
Scenario #1: The company has distributors of the product and reviewing the prices quarterly. The pricelists need to have target and end date. Once the revision process is finished, old pricelists are superseded by the new pricelists that are then sent to distributers.
Scenario #2: The company resells the products to other businesses and calculated the prices depending on the country and product group. There are different pricelists for different country and they are updated on year to year basis.
To see Pricelists in action, check our video tutorials.
Live Price Grids
When to use? 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 how prices are calculated, the outputs of which can be visible in the form of 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 base of set of rules and the items that has not been verified for automatic approval then will be sent for manual revision of pricing manager.
Typical business scenarios:
Scenario #1: The company is selling computers via online shop and orients ist pricing on 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 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? When pricing manager 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 needs to be change and we want to see the impact on the result price before changing/reviewing existing pricelists.
Where to start with Price Setting?
Pricefx offers Accelerate Price Setting Package that can help to start using tool capabilities faster than 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 Headquarter 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.
To be discussed and deleted later:
FAQ (can be added to later KB releases)
Useful Reads (can be added to later KB releases)