Research has shown that pricing can be one of the most effective levers for improving profitability. However, identifying opportunities to adjust pricing to achieve maximum profitability can be challenging. As a result, at many companies pricing is treated as an art, not a science. By leveraging Versata’s experience and tools, pricing can be treated as a science of strategic importance.
Price Execution Leadership
Companies can maximize profitability by independently tuning prices for every product sold to every customer. For any sizable business this would be impractical using traditional means due to the huge quantity of prices that would need to be maintained. However, by using a rule-based pricing engine, such as the one included with Versata’s Pricer™, this is not an impossibility.
Versata Pricer™ will allow you to define pricing rules based on criteria such as geography, distribution channel, unit-of-measure, product category, or any other criteria that makes sense for your business or industry. Your rules can also have associated date effectivity periods making it possible to implement, for example, seasonally adjusted prices. Further, all of your rules will be organized in a hierarchical manner. This allows you to define, for example, a discount rule for customers in the eastern region of the United States and subsequently override that rule for customers residing in New York state. Through our patented pricing rule representation, you can densely specify pricing rules that ultimately result in pricing tuned for every product sold to every customer.
Smarter Profitability Analysis
The first step in optimizing prices is to understand how your current prices affect your profitability on a customer-by-customer and product-by-product basis. It is not uncommon that a company’s highest volume customers, the customers with the greatest opportunity to affect profitability, have negative profitability due to injudicious granting of discounts and incentives. Versata can provide you with tools that can help you identify the customers and products that are costing your company money. These tools include:
- Customer Profitability Summary
- Revenue-Price-Mix Variance Report
- Account Plan
The insight gained from these tools cannot only be used to put an end to the granting of discounts and incentives that don’t make financial sense, but also to determine the ideal prices that you should be charging each customer for your products.