What is Price Optimization & Management and how should you choose the right PO&M solution for your business?
‘Price Optimization & Management’ or ‘PO&M’ for short, refers to the technology and processes that an organization uses to efficiently manage and optimize the price of its products and services, both external and internal, including actions such as:
- – Scrape competitors’ data
- – Analyze historical transactions
- – Calculate list prices
- – Simulate revenue and profit
- – Recommend list price changes
- – AI-driven price optimization suggestions
The practice of price management includes not only guidelines, rules & support for how pricing takes place, but also tools for organising and tracking all the relevant price information you need to set better prices, close deals and retain customers, build stronger relationships, increase profits, set more personalized price points and, overall, make pricing processes more efficient.
Internally, a PO&M tool can help pricing teams automate their pricing activities and managers track their pricing team’s performance. With a PO&M software, you’ll know when to adjust your pricing, what the price change should be, and how to communicate it.
The topic of price management and the challenge of selecting the right PO&M system for your business can be intimidating.
We want to explain price management and help you understand how PO&M software can help you build a foundation for pricing excellence.
The basics and benefits of PO&M
Here we’ll run through how PO&M platforms work and the benefits of adopting one in your organization.
PO&M strategy, technology and how they work together
Before going into the tangible benefits of a PO&M tool, it’s important to understand the difference between PO&M technology and PO&M strategy.
In summary, the key difference is this:
- 1. PO&M Technology: Acts as a central platform where primarily data for pricing can be organized, used, securely shared and acquired. It provides functionality for price management and reporting, as well as the ability to communicate and track all touchpoints with your contacts.
- 2. PO&M Strategy: These are the processes that organizations put in place to standardize and optimize the way PO&M technology is used.
To best utilize PO&M technology, you need a customer-centric strategy. However, this strategy should be enabled by the technology, not the other way around.
Your PO&M shouldn’t be seen as a tactical advantage. The most successful organizations use their PO&M as a strategic function across all areas of the business. This further helps to break down the barriers between sales, pricing, and management.
So, how do you define, integrate and execute a PO&M strategy?
Start by taking a broad view across all functions of the organization. This means sales and pricing, as well as other departments such as customer success, fulfillment, product teams, and technical support.
This also requires an evaluation of other technologies used within the organization, and how they will contribute to the PO&M strategy. Platforms around business intelligence, marketing automation, and e-commerce platforms should all be evaluated.
The role of PO&M technology
In this section, we’re going to take an in-depth look at PO&M technologies.
You’ll learn which features you should prioritize, how to communicate to senior decision-makers and persuade key stakeholders, and the selection process to find a vendor that’s right for you.
Why you should invest in a PO&M platform
There are several reasons to invest in PO&M, and we’ll take a look at each in-depth to help you fully understand the importance of adopting a good PO&M platform.
Everyone makes mistakes
Do you remember every key piece of information from pricing decisions and meetings? It’s highly unlikely, and even if you kept written notes, they’re liable to go missing.
Don’t rely on memory alone. Use PO&M technology to store key information on your conversations. Train your pricing teams to enter this information as soon as they’ve ended a call or meeting.
Not only does this lead to more efficient pricing and follow-up processes, it means more data for you and your teams to collect in the long-term.
Monitor key metrics
Without a PO&M platform in place, you probably have multiple Excel spreadsheets set up for price rules, price lists, and deal tracking.
It’s good to keep track of these things, but having everything in silos can cause miscommunication between team members. Not only that, it’s also far more difficult to yield useful insights from those numbers.
With a PO&M platform, all of your sales, pricing and web data are in one place. This will allow you to create more accurate sales forecasts and create a pricing process built on a more predictable revenue model.
Keeping data secure
Another downside to having spreadsheets containing your data is that it’s insecure. Furthermore, if you lose that data or files become corrupted, it’s hard to retrieve. Everything is stored in the cloud on secure servers, meaning your data is usually safer and more secure than it would be sitting on your local computer.
If you want to learn more about the benefits of a PO&M software and what steps you should take to pick the right one you can read more on that from our blog here and here.