Tip Sheets

MYTH #3: "We use consultants to help us provide the right price recommendation for our products, so we don't need pricing software." TRUTH: It's important to understand that consultants are creating pricing at the broad national level, not at the granular customer and product/SKU level, which is where all the profit potential is hiding. If you're only addressing pricing at the national level, you're leaving 200-500 basis points of margin on the table across all customer and SKU combinations. That's why so many top-tier companies quit doing national- level pricing a decade ago. It's impossible to effectively manage pricing in a table, and here's why. Let's say you have 15,000 customers and 25,000 SKUs serving two sales channels: a sales rep selling direct to customers and an online channel. That comes to 7.5 million different price points that you need to address every day if you're going to effectively manage pricing. Or let's say you have 15,000 customers and 225,000 SKUs. That comes to 6.75 billion price combinations that you need to manage. Add the volatility in both cost and customer willingness to pay and a pricer could be trying to adjust hundreds of thousands of prices each and every day. While there are a million rows in Excel, realistically you can use about 400,000 rows. That means if you must create 6.7 billion price combinations, you will need over 16,000 Excel workbooks to update pricing. And that's just for one price update. If you get a cost change across 5,000 SKUs, you'll need 750 Excel workbooks. Add in a reseller channel and that creeps up to 10.1 billion price points. At PROS, we have customers with over 700,000 SKUs and 150,000 customers. That's 315 billion price combinations. That comes to 1.5 million Excel files if you want to price at a granular level without pricing software. As a result, many businesses settle for fewer workbooks and perhaps divide a country into regions so you might end up with four price points for your product. However, four price points for your product is unacceptable today. Not only do you have this behemoth of a spreadsheet that a team of consultants has to maintain because no one at your company knows how to execute it, you're only keeping your pricing semi-active, which means you're leaving serious money on the table over the life of these products. Once businesses switch to the PROS platform and the power of our real-time pricing engine and AI, things change quickly. For example, one distributor gained $74 million in revenue after switching to the PROS AI-powered platform. MYTH #4: "Pricing software is for large enterprises, but that's not something we need since we're a small business." TRUTH: Whether you're a big manufacturer or small mom and shop distributor, all businesses are facing similar challenges like cost fluctuations, rebate complexity, and deviations in margin leakage. Even the smallest distributor still has millions of price points to consider, as I illustrated above. For example, if you only have 1,000 SKUs and 5,000 customers, that's still 5 million price combinations that you need to manage every day. What's more, all businesses today have the same challenges of providing a fast and efficient experience that customers demand. Most buyers expect the same buying experience they receive in the B2C world, and that requires real-time pricing and across multiple channels like eCommerce. MYTH #5: "Our consultants are helping us manage pricing much better than we were." TRUTH: Consultants can help you fix a gap you have today in your pricing, but it's only a short-term fix because the marketplace is always changing. In other words, pricing is not a destination, it's a journey. Consultants will help you set up a go-to-market (GTM) strategy, but there are two major issues once developed and deployed. First, you will need to continue their expensive billable hourly rate to keep up with the constant changes and fluctuations in the marketplace. Second, the moment anyone extracts data from BI tools, ERPs, etc. to calculate new price books, the data becomes stale. By the time all calculations are complete and re-uploaded, driving inefficiencies and risk of error, it will be time to start all over again. A pricing platform can help you move forward through PRO TIP Scan the code to learn about Enterprise AI for pricing teams

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