Skynet Chronicles: PROS aims to boost its pricing savvy with $13.5M SignalDemand buy

December 16, 2013-

PROS, a publicly traded company that helps salespeople figure out the right price to quote to potential customers, wants to add to its price-recommendation smarts by announcing plans to acquire predictive-analytics company SignalDemand for $13.5 million.

The deal will thicken up PROS’ capabilities specifically in “resource-based and commodity-driven industries, helping them to better serve their customers in volatile markets with greater confidence and agility,” PROS’ chief executive, Andres Reiner, said in a statement.

For both PROS and SignalDemand, providing real-time performance is critical. Just as financial-services companies want technology to execute lightning fast trades in order to capitalize on immediate opportunities, sellers and buyers at big companies need live market data to inform their pricing systems. That way, they can prevent mistakes and exploit sudden shifts that could affect supply and demand.

PROS software gives recommendations on prices and shows the likelihood that a sales lead will buy at different price points. The company also provides software for tracking all rebates across an entire company and showing how they affect profitability.

Software from SignalDemand can figure out the best prices to offer to customers in a way that maximizes profit margins, even while commodity market prices change. Other products can tell manufacturers when to change formulas or tell salespeople which products to sell.

The $13.5 million figure PROS is paying for SignalDemand seems fairly low considering that the company raised $20 million back in 2008, and considering that big food and agriculture companies such as Hormel Foods, Cargill, and ConAgra Mills are listed on the company’s online customer list.

In 2008, SignalDemand sought to enter more industries, such as paper making, although that does not appear to have happened to the extent executives might have wished it to. Still, agriculture is one area where PROS does not appear to have many customers, and that explains the deal in part.

So does Signal Demand’s storehouse of intellectual property. “They have 9 patents; we have 20,” James Garber, PROS’ senior director of corporate communications, wrote in an email to VentureBeat.

SignalDemand, based in San Francisco, has around 40 employees. The Bay Area presence was another desirable quality for PROS, Donaldson wrote.

PROS said it would buy Cameleon Software for $33 million in October. PROS reported $36.8 million in revenue and $993,000 in net income for the third quarter of 2013, according to its latest earnings statement.