Did you know that a 1% improvement in price optimization can bring on an average boost of 11.1% in profits?
Anyone familiar with this fact is professionally and thoroughly engaged in price optimization. Still, a vast number of businesses are guessing or copying competitors’ prices which indicates plenty of room for improvement. The process of price optimization is beneficial because it affects all business areas. While practicing optimization, companies learn about their customer, stay up to date with market changes, and maximize sales and profit.
Whether you are satisfied with your business or struggle to keep up with the competition, this topic deserves your attention if you strive for progress and prosperity.
To optimize prices means to determine what is the ideal price point that your customer is willing to pay for the product or service that will, at the same time, maximize your profitability. Price optimization is the ongoing process that analyzes gathered data and determines the most efficient price for both parties, the consumer and the company.
If the price is set too high, customers will switch to the competitors with more affordable prices, if it is too low, customers will lose trust in your product or service thinking it would not give them value. Since price is a delicate element, the optimization process should be thorough, extensive, and continuous.
Complete knowledge of your customer and market is required. Customers’ needs must be monitored on a daily basis to detect any changes in their early stages. It is significant to adjust in real-time since customers can look for a solution from your competitors to meet their emerging needs. Failure to do so means losing customers and sales decrease.
The significant starting point in the process of price optimization is to get to know your customers and to determine what is their perceived value about your product or service as well as how much are they willing to pay for it. A perceived value refers to the customer’s evaluation of your product or service and their opinion of whether it can meet their needs, compared to a similar product or service on the market.
In order to thoroughly understand customers’ behavior, you will have to dig into data. Depending on the industry, market, and your business goals some of the information required is:
Once you gather data related to your industry, the next step is data organization and data analysis. The process should be done from scratch because findings differ from business to business. The most convenient and reliable way to conduct the analysis is via price optimization tools. The tool gives meaning to obtained results and points out the important metrics. The reports will show what your customers value and what is the optimal price point for them. Therefore, it will suggest proper price adjustments for your business. Price adjustment is a crucial step in the price optimization process that actually never ends.
The biggest price optimization benefit is gained through price monitoring. Many companies make a mistake by wrapping up the process with a price adjustment and leaving it as it is. On the other hand, those who understand the importance of daily monitoring and adjustments in real-time are market leaders.
The last step in this cycle will set you apart from the competition. After taking the first three steps, step back and pay attention to the outcomes. But pay attention every day. Due to the rapid changes in the market, the constant emergence of new competition, and the opportunities for progress that existing competitors take advantage of, it is important to stay up to date with data. This way, you can adjust prices in real-time when the market requires repricing. Whether there has been a change in customer needs, or your competition has changed prices, you must respond promptly.
It seems like a complicated process, and it really is. Fortunately, there are easily accessible, time-saving solutions that are accurate and reliable. As mentioned, every price optimization process is unique, so there are different pricing software options to choose from to focus on a specific need.
The solution that will best meet your needs will depend on whether your business is B2B or B2C, what software you use, and your ultimate goal. The offer is wide, there are more than fifty tools, but we will single out one pricing software and focus on its features to point out its benefits. We chose to present the Price2Spy software solution since it was launched among the first three of this kind and it has a diverse client base. It offers services to online retailers, distributors, brands, and manufacturers in all industries worldwide.
Price2Spy main features:
Request the demo for a better understanding of Price2Spy software.
It doesn’t matter whether you are a local business, family-owned company, or multinational corporation whether you are selling products or services, or if your business is in the mining, energy, food, or computer industry. When price optimization is done properly, it will positively affect all the aspects of your business. When you succeed in balancing value and profit you will notice the improvement in sales and marketing, customer satisfaction, as well as growth and profitability. Price optimization doesn’t have to be as complicated if you choose the right tool.