Putting together a perfect pricing strategy is not easy, any retailer can tell you that. Finding the sweet spot for your products’ prices takes a lot of time, effort, and resources. Many choose to do their pricing internally, and some choose to use an automated solution. We’re here to clear the air and explain why a pricing engine is ultimately beneficial for your business.
1. Pricing Internally is Hard
Some retailers have pricing specialists who search the web for competitor prices and use that data to determine the prices for their own products. These teams are extremely beneficial for retailers, but they also leave a lot of room for inefficiencies and human error.
2. They Do More Than Just Lower Prices
Many retailers believe the sole purpose of a pricing engine is to decrease prices to attract customers to their store. Since some are the only resellers of certain items, they don’t see the point of having a pricing engine to provide them with competitive insights. Why decrease the price of an item that doesn’t warrant intense competition? Well, the cool thing about pricing engines is that they do so much more than that.
An intelligent pricing tool will understand when you’re the only seller of certain items in your assortment so it can increase the price of the product to capitalize on the opportunity and maximize margins. It can also help you match the prices of “like products,” as in products that could be used as a substitute for your unique item. This way all of your bases are covered and you remain competitive no matter what the circumstances are.
3. Pricing Can Bring Value to All Parts of Your Business
In order to be successful, you need to make sure that your price is right. Price is a major factor in a consumer’s purchase decision, and you should know that if your prices are out of line, a shopper may not even give your store a chance. Pricing strengthens different parts of your business, and being able to use it as a point of differentiation can give you a major competitive advantage.
What I mean by this is the fact that you can use your prices to justify marketing expenditure. Being able to advertise the fact that you have the lowest price is possible with any competitive monitoring software. It can empower your marketing efforts, and help boost your profits while staying competitive.
4. You Need Competitive Intelligence
With a pricing engine, you can gain competitive intelligence without being sketchy like Bill Belichick. Imagine having your competitor’s playbook to map out your business decisions based on their recent pricing history. That’s what it’s like to have competitive insights. Storing your competitor’s data in one place can give you the information you need to get ahead of the competition.
5. They Will Not Drive Your Prices to the Bottom.
Many automated pricing solutions are often synonymous with price wars. Lots of competitors will drop their prices drastically low because they think that retailers with automated repricers will follow the plunge and destroy their margins. However, that doesn’t have to be the case. With prices guards in place, your minimum price can prevent a drastic hit to your margins.
Pricing engines do so much more than simply lower your prices. They provide retailers with actionable insights to help them stay competitive and profitable. Recently, some repricers have gained a bad rep due to malfunctions. Be sure to do your research to find a safe and reliable pricing engine that will treat your pricing carefully. Because after all, finding the right price is stressful enough as it is.
Contributing Writer: Brian Smyth