In an age of automated ports and AI-powered hiring, many companies’ go-to method to manage pricing is amazingly low-tech ─ typically a mash-up of emails, spreadsheets and disjointed business intelligence tools.

Even highly sophisticated, billion-dollar corporations take this approach, and realize negative financial impact as a result. As costs of goods and services change, failure to quickly update prices leads to significant margin loss, according to a recent analysis by pricing software company Zilliant. 

The average turnaround for B2B companies to update pricing is between six weeks and four months — far too slow in today’s economy. These instances are increasing in frequency and intensity amid persistent inflation and supply chain disruptions, and a failure to address them quickly could be devastating.

Spreadsheet Struggle

The problem with spreadsheet-based pricing models is that they can’t possibly account for the complexity in most businesses or provide sales reps with deal-specific price guidance for each transaction or contract. These models typically use overly broad price segmentation, making most prices irrelevant to nearly every deal and setting you up to drive away some deals you would like to keep and leave money on the table for others. Additionally, the spreadsheet-based model won’t know which outcome occurred, so the issues will continue to propagate. Over time, prices set using this manual method become irrelevant, and sales teams must apply subjective judgment and experience to override the outputs of the price models. 

Of course, up-to-date pricing is needed in more channels than traditional, sales-led channels. Compounding the issues of the supply chain crisis and inflation, the pandemic accelerated the prevalence of digital sales channels. Therefore, pricing must be up to date for sales reps in CRM, ERP or CPQ, for inside sales teams in order entry systems, and for customers buying via e-commerce — whether that’s pricing listed on the open web or customer-specific pricing for those who log in with their account credentials. 

Pricing with manual tools can’t update prices fast enough as market conditions change. When costs change, or a price move is necessitated by other market triggers such as competitive price moves, tariffs, or supply scarcity, by the time pricing analysts can analyze the data, apply it to the many types of pricing that exist in one business — list, matrix/tier, spot/negotiation, or customer-specific — and send out the spreadsheets to be updated in various systems, the market has changed again, and the new pricing is outdated. 

Certainly, spreadsheet-based pricing is proving to be an inadequate tool for extremely volatile and unpredictable market realities. So, what’s holding companies back from embracing a more advanced, end-to-end approach to rapid price response? The answer is proving to be a technical one. 

Overcoming the Pricing Dilemma

Companies continue to rely on spreadsheets for a simple reason: Execution systems like ERP, CRM and CPQ were not designed to manage prices, and they certainly weren’t built to price dynamically. These systems are essential, of course, and have been a boon for streamlining operations, yet as the pricing dilemma has mushroomed, they are proving unequal to the task. Hence the fall back to pricing spreadsheets and manual tools. 

Take the case of ERP. Many companies house complex pricing logic within one — or many — ERPs. Any single customer interaction can trigger a complex pricing sequence to calculate the predetermined price for that order and the attendant taxes and fees. It’s not uncommon for B2B companies to have multiple ERP systems, in which case a single order may have to run through several systems before a price can be generated. This bogs down the quote-to-cash process, frustrating customers and sales reps, but it also presents a challenge for pricing teams. When pricing updates are needed — a critical task that’s increasing in frequency — pricing teams must initiate a cumbersome process, retrieving pricing data from rigid ERPs, compiling that information with new data in spreadsheets, making necessary updates, and gaining stakeholder buy-in before updating. As outlined above, it’s a costly, error-prone and painfully slow process, but it’s also disconnected from critical commercial systems. Getting updated and accurate pricing back into CPQ, CRM, ERP, e-commerce and all other systems is difficult and adds to the time lag. 

Rather than leaning on execution systems and spreadsheets to ensure pricing is up-to-date, enterprising company leaders are embracing a powerful combination: robust price management software that lives outside of the ERP system and real-time pricing engines, powered by REST-based APIs, to deliver those prices to the execution systems on-demand. By doing so, they are changing the game and overcoming the pricing dilemma. 

With this modern approach, companies are leapfrogging competitive pricing capabilities with minimal disruption to the business. Pricing changes that used to take weeks or months now can be accomplished in hours or less. There’s more than an operational benefit, though. These companies can also become highly strategic and dynamic in their pricing strategies. For example, each of the following capabilities is proven and available now: Automating cost pass-through, managing price exception requests and approval processes, running what-if scenarios to understand the business impact of pricing strategies, bringing in an unlimited amount of data such as e-commerce or competitive data to inform pricing strategy, empowering customers with self-service capabilities, and much more. With robust scalability, high availability, and high performance, pricing can be delivered to or updated in commercial systems within milliseconds. 

Confronting the pricing dilemma while the supply chain is in crisis mode is critical. But companies no longer need to rely on manual pricing in spreadsheets or go through cumbersome ERP overhauls to price dynamically. 

Company leaders have an immediate opportunity to replace manual tools and processes with robust price management and overcome the dilemma of slow, outdated pricing processes. Once in place, the capability multiplies, enabling dynamic omnichannel pricing in real-time. By doing so, they will be better equipped for today’s inflation and supply chain crises, as well as the unavoidable disruptors of the future.

Barrett Thompson is general manager of commercial excellence at Zilliant.

In an age of automated ports and AI-powered hiring, many companies’ go-to method to manage pricing is amazingly low-tech ─ typically a mash-up of emails, spreadsheets and disjointed business intelligence tools.

Even highly sophisticated, billion-dollar corporations take this approach, and realize negative financial impact as a result. As costs of goods and services change, failure to quickly update prices leads to significant margin loss, according to a recent analysis by pricing software company Zilliant. 

The average turnaround for B2B companies to update pricing is between six weeks and four months — far too slow in today’s economy. These instances are increasing in frequency and intensity amid persistent inflation and supply chain disruptions, and a failure to address them quickly could be devastating.

Spreadsheet Struggle

The problem with spreadsheet-based pricing models is that they can’t possibly account for the complexity in most businesses or provide sales reps with deal-specific price guidance for each transaction or contract. These models typically use overly broad price segmentation, making most prices irrelevant to nearly every deal and setting you up to drive away some deals you would like to keep and leave money on the table for others. Additionally, the spreadsheet-based model won’t know which outcome occurred, so the issues will continue to propagate. Over time, prices set using this manual method become irrelevant, and sales teams must apply subjective judgment and experience to override the outputs of the price models. 

Of course, up-to-date pricing is needed in more channels than traditional, sales-led channels. Compounding the issues of the supply chain crisis and inflation, the pandemic accelerated the prevalence of digital sales channels. Therefore, pricing must be up to date for sales reps in CRM, ERP or CPQ, for inside sales teams in order entry systems, and for customers buying via e-commerce — whether that’s pricing listed on the open web or customer-specific pricing for those who log in with their account credentials. 

Pricing with manual tools can’t update prices fast enough as market conditions change. When costs change, or a price move is necessitated by other market triggers such as competitive price moves, tariffs, or supply scarcity, by the time pricing analysts can analyze the data, apply it to the many types of pricing that exist in one business — list, matrix/tier, spot/negotiation, or customer-specific — and send out the spreadsheets to be updated in various systems, the market has changed again, and the new pricing is outdated. 

Certainly, spreadsheet-based pricing is proving to be an inadequate tool for extremely volatile and unpredictable market realities. So, what’s holding companies back from embracing a more advanced, end-to-end approach to rapid price response? The answer is proving to be a technical one. 

Overcoming the Pricing Dilemma

Companies continue to rely on spreadsheets for a simple reason: Execution systems like ERP, CRM and CPQ were not designed to manage prices, and they certainly weren’t built to price dynamically. These systems are essential, of course, and have been a boon for streamlining operations, yet as the pricing dilemma has mushroomed, they are proving unequal to the task. Hence the fall back to pricing spreadsheets and manual tools. 

Take the case of ERP. Many companies house complex pricing logic within one — or many — ERPs. Any single customer interaction can trigger a complex pricing sequence to calculate the predetermined price for that order and the attendant taxes and fees. It’s not uncommon for B2B companies to have multiple ERP systems, in which case a single order may have to run through several systems before a price can be generated. This bogs down the quote-to-cash process, frustrating customers and sales reps, but it also presents a challenge for pricing teams. When pricing updates are needed — a critical task that’s increasing in frequency — pricing teams must initiate a cumbersome process, retrieving pricing data from rigid ERPs, compiling that information with new data in spreadsheets, making necessary updates, and gaining stakeholder buy-in before updating. As outlined above, it’s a costly, error-prone and painfully slow process, but it’s also disconnected from critical commercial systems. Getting updated and accurate pricing back into CPQ, CRM, ERP, e-commerce and all other systems is difficult and adds to the time lag. 

Rather than leaning on execution systems and spreadsheets to ensure pricing is up-to-date, enterprising company leaders are embracing a powerful combination: robust price management software that lives outside of the ERP system and real-time pricing engines, powered by REST-based APIs, to deliver those prices to the execution systems on-demand. By doing so, they are changing the game and overcoming the pricing dilemma. 

With this modern approach, companies are leapfrogging competitive pricing capabilities with minimal disruption to the business. Pricing changes that used to take weeks or months now can be accomplished in hours or less. There’s more than an operational benefit, though. These companies can also become highly strategic and dynamic in their pricing strategies. For example, each of the following capabilities is proven and available now: Automating cost pass-through, managing price exception requests and approval processes, running what-if scenarios to understand the business impact of pricing strategies, bringing in an unlimited amount of data such as e-commerce or competitive data to inform pricing strategy, empowering customers with self-service capabilities, and much more. With robust scalability, high availability, and high performance, pricing can be delivered to or updated in commercial systems within milliseconds. 

Confronting the pricing dilemma while the supply chain is in crisis mode is critical. But companies no longer need to rely on manual pricing in spreadsheets or go through cumbersome ERP overhauls to price dynamically. 

Company leaders have an immediate opportunity to replace manual tools and processes with robust price management and overcome the dilemma of slow, outdated pricing processes. Once in place, the capability multiplies, enabling dynamic omnichannel pricing in real-time. By doing so, they will be better equipped for today’s inflation and supply chain crises, as well as the unavoidable disruptors of the future.

Barrett Thompson is general manager of commercial excellence at Zilliant.