Why should we use price management software?
Let’s start from an example, which is not connected with price management and e-commerce.
Tesla is launching autopilot functions in their vehicles, what means that cars (in particular conditions) have fully self-driving system. Such cars will be fully autonomous in near future. Opponents of such solutions were using all incidents connected with autopilot to defend their thesis that a man can’t be replaced and it’s safer when we drive a car, and not a computer.
Actually, autonomous driving is safer. It turns out that although autopilot computer isn’t perfect and its reactions are programmed (limited), it has some important advantages over humans:
- It doesn’t get tired and it’s always vigilant
- It watches car’s surroundings, using cameras and radars, thanks to what it sees everything around the car. The man can only look in one direction.
So it’s safer to drive using autopilot – however we must supervise it. (I’m directing you to Tesla Motors materials, where you can find more statistics and researches about this)
The introduction was a little too long, so let’s get down to business … 😉 It’s similarly with price management.
We’ve analysed works of 11 Product Managers (PMs), who were managing about 1200 products. Their duties were: the purchase of products, price management, special offers management and support for trade department. We were analysing electronics branch: laptops, phones, tablets and so on, which is characterised by low marges and short product working time.
Price management- observations:
- Prices were checked everyday (compared with competition) for less than 10 % of products (on average)
- High-rotation products were mainly supervised
- Average delay for low-rotation products in price adaptation for changes in the market was 18 days
- In 63 % of cases, PMs use not more than 2-3 pricing strategies – only 18 % of them test new strategies
Because of many duties PMs manage prices, in a sufficient way, of only small percentage of products. It means that most of the products are ‘neglected’ and they could show higher rotation, when a right pricing and special offer strategy would be chosen for them.
Price management software, for example: Price-expert.net
Price management software (or profits management software) is meant to support PMs in the process of price management, thanks to monitoring:
- Sales level
- Prices in competitive e-shops
- Price comparison sites and auctions (we can react quickly to price changes and change prices automatically, even several times a day)
However the most important function is possibility of testing different pricing strategies and choosing the best strategy for a particular product group. Price-expert enables us carrying out fully automatic pricing tests, consisting in profit analysis depending on the used pricing rule. Carrying out such tests by yourself with a huge number of products is almost impossible.
Price management software won’t replace PM’s work, but it can help him meaningfully. It supports him to choose the best pricing strategy (which is usually set with reference to competition’s prices) and automatically cares about updating of products pricing offer.