Price optimization software might make your CFO smile

October 14, 2011-

By Caron Carlson

Story courtesey of Fierce CIO

Here’s something that might win you some points with the CFO: The price optimization software sector has experienced a revival, and there are a host of providers eager to help your company become more agile and maximize profitability, reports Roy Harris at CFOWorld. Pricing products is a tricky business, and if you get it wrong you can either lose customers or lose money. Britt Vitalone, finance chief at the medical-surgical supply unit of McKesson Corp., realized this when he noticed a few years ago that pricing within product groups was inconsistent. He needed a meaningful way to adjust prices from customer to customer and give sales reps tools to “optimize” prices in real time. They needed better information on the prices that different customers were willing to pay.

Price optimization software can provide information on products, customers and transactions. High volume customers and low volume customers, for example, may not always have the same cost structures in mind. Software can also provide information on how much people in different parts of the country are paying for the same products. When all of this information is processed almost in real time, it can be delivered to sales people constantly. “That way, the business takes ownership of the data, and information about how customers are reacting,” Vitalone said. When sales personnel are equipped with so much data, however, they effectively become analysts and require some training. “There is a big communication aspect to this,” Vitalone said. “Data can be very powerful, but it’s also very dangerous.”

Price optimization software is not necessarily cheap, but some vendors claim customers see a return on the investment within a year.

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