John Moss, CEO of Flintfox
The economic landscape has grown increasingly complex in recent years, posing new challenges for businesses, particularly when it comes to pricing. Stubbornly high levels of inflation and subsequent interest rate rises have led to volatility in costs and demand, all of which are causing headaches for pricing teams and key decision makers. To navigate this, businesses need to put systems into place that enable more effective price management, and here’s why.
The default for many businesses in times like these is cost saving, reducing headcount, closing stores or downsizing sites. Although these measures may help to protect profits in the short term, they represent a business risk. They can have a negative impact in the long term by inhibiting growth when recessionary conditions begin to ease and the rate at which costs are currently increasing is so significant that these methods likely won’t be able to provide enough of a cushion to make a lasting difference.
The alternative to cutting costs is generating more income, yet the task of managing pricing is far from straightforward for most businesses. In the past, historical data served as a dependable foundation for forecasting the future. However, ongoing economic uncertainty has made this approach increasingly untenable and for manufacturers and retailers, making adjustments to pricing has become more difficult. Without easy access to precise data on all of their prices, businesses risk making the wrong pricing adjustments and alienating both existing and potential customers.
Currently the effort spent on juggling multiple pricing spreadsheets creates a huge drain on resources, and getting a real-time overview of profitability seems almost impossible for many businesses. Have no fear though, intelligent pricing can offer the solution that you have been looking for.
Intelligent pricing provides businesses with insight into achieved margins and then goes on to highlight the areas where price adjustments are needed to optimise revenue and profitability.
Using an automated pricing tool can also help to mitigate the risk of human error as well as under-pricing. Changes can be executed quickly and take immediate effect, which gives sales teams more time to focus on current and new customers. It is valuable for sales teams to be able to model deals in real-time as this enables them to commit to prices that achieve desired margins and avoid any potentially risky scenarios.
In difficult trading conditions, businesses often move straight to standardised price hikes, however business leaders should instead look to adopt a data-driven pricing strategy that is more precise and adaptable. Intelligent pricing has the ability to collect large amounts of data from different locations and consolidate it all in one platform. We believe that the best way to tackle variability is to have better visibility. Automated pricing can help to provide more comprehensive pricing data that spans various categories, subcategories, and individual product units. This gives businesses an instantaneous overview of their costs, which enables real-time assessment of profit margins and where price adjustments can be made in different places. This approach also helps to maintain both brand reputation and customer loyalty.
Rebate management is also an important part of financial management. On average, an estimated £2.65 million in rebates goes unclaimed annually by companies globally. Transitioning to an automated system can help businesses avoid loss of profits with more accurate calculations as well as more timely claims or payments. The time taken to claim rebates can be reduced, with claims submitted promptly upon the accrual of owed amounts, leading to improved cash flow.
In a landscape characterised by unpredictability, gaining control is invaluable. A well-crafted pricing strategy, combined with the right pricing tools, allows businesses to confidently execute pricing decisions, even when faced with the most challenging market conditions.