Pricing and Profitability Management: A Practical Guide for Business Leaders

Building a Business Case for Pricing Technology

As with any improvement initiative, when implementing new pricing technology management must be able to justify the costs, enumerate the benefits, and forecast a return on investment (ROI) and payback period. Companies can be wary of implementing new pricing technology because it can be costly and resource-intensive. But if they properly assess the proposed solution in advance and determine its goals carefully, then it should yield substantial and lasting returns.

Targeted Benefits

Any improvement program should be driven by critical business imperatives, not solely by a desire to replace an existing technology. It must also be unencumbered by false assumptions. Technology, no matter how advanced, will not achieve the benefits that can come with systemic organizational improvement of pricing capabilities (including the supporting processes and policies). But picking the right technology solution should help companies in their efforts to realize those benefits faster, increase returns, and sustain the improvements over the long term. Besides helping to strengthen the bottom line, new technologies can:

• Deepen insights into customers and sources of profitability. Sophisticated applications can help a firm in setting and managing pricing policies more effectively by arming the sales force and marketing organization with detailed information that can help them better understand customer segments and the performance of individual buyers. ...