Selecting the right pricing software is crucial for businesses to stay competitive, optimize profits, and respond effectively to market dynamics. The right solution ensures accurate pricing strategies, effective implementation, streamlined operations, and the ability to adapt quickly to changes—to ultimately drive long-term success. However, selecting the right pricing platform should be a multi-step process, nearly 40% of companies report using RFPs as a formalized part of their procurement process,
In SaaS-driven industries, it’s clear that a well-crafted RFP is a critical step in making the right choice.
We recently explored the key criteria for selecting the ideal pricing software, helping businesses identify the features and capabilities that align with their strategic goals.
This time, we’re diving deeper into the practical side of the process: the specific functional requirements that must be included in your RFP.
This blog will serve as your comprehensive guide to the questions you should be asking to ensure your RFP includes all the essentials and sets the stage for selecting a profit-maximizing software. Let’s dive in:
Coming Soon: All The Must-Have Technological Features in a Pricing Software
How Can I Ensure Effective Multi-Channel Pricing?
A pricing software must accommodate diverse sales channels and adapt prices accordingly:
- Price Corridors and Harmonization: For certain products, prices should be equal across channels (e.g., online/offline), account for different taxes or currencies (depending on geographical proximity), or be positioned within a certain price corridor.
- Channel-Specific Price Differentiation: Instead, other products may require channel-specific pricing strategies that account for local customer needs, price sensitivity, or competitive intensity (e.g. online vs. offline).
- Channel Hierarchy: A pricing software should offer a holistic perspective on pricing and performance across all channels (e.g., big box stores vs. shop-in-shop) and channel levels (e.g., by state) to maintain transparency and alignment, and strategize accordingly.
Quicklizard’s Multi-Channel Operations Dashboard
What Are the 11 Key Requirements for Pricing Strategies?
A pricing software should include the following features for your team to efficiently and effectively implement pricing logic:
1. Dynamic Rule-Based Adjustments: Pricing rules automatically adjust based on predefined factors such as market conditions, inventory levels, and competitor prices.
2. Flexible Rule Creation and Modification: Superusers can easily create, customize, and modify pricing rules to fit evolving business needs.
3. Multi-Level Rule Application: Enable pricing rules to be applied at both an individual SKU level and the logical product group levels.
4. Unlimited SKU Grouping: Provide unlimited options to group SKUs and apply different strategies, limits, and rounding rules to each group.
5. Override Capability with Audit Trails: Allow users to override pricing recommendations when setting the final price and include functionality to add explanatory notes for the override.
6. Rule Transparency: Clearly display the rules and logic used in generating price recommendations for user review and auditing.
7. Pre-Built Rule Library: Include an established library of common pricing rules to accelerate implementation and adoption.
8. Customizable Strategies: Offer high flexibility to design and implement unique, non-standard rule-based pricing strategies.
9. Complex Rounding Customization: Support advanced rounding rules tailored to specific business or regulatory requirements (e.g rounding based on category, brand, or others that are not “off the shelf”).
10. Channel-Product Relationship Customization: Enable the creation of customized relationships between channels and products to reflect business-specific pricing strategies.
11. UI-Based Parameter Management: Provide an intuitive parameter sheet that allows users to modify pricing strategy parameters at category, brand, and channel levels directly from the user interface, and not only through programming.
RFP Requirements for Competitor-Based Pricing
It’s common knowledge that competitor based pricing is a key piece of the puzzle when it comes to winning customers and optimizing profit.
Remember to keep these requirements in your RFP:
1. Dynamic Notifications and Adjustments: Provide notifications or automatically adjust prices in response to competitor price changes.
2. Customizable Rules: Enable users to set competitor price matching rules at various levels, such as individual products, categories, or product lists.
3. Bulk Price Matching: Allow for the bulk matching of a large number of products, especially for private labels and branded items, to streamline operations and ensure consistency.
4. Competitor Sensitivity Analysis: Correctly analyze competitor data to identify which competitors and products matter most to you, and avoid unnecessary price wars. These days, using AI to analyze competitor data is essential – read more about AI requirements in a pricing software below.
Explore detailed insights below in the AI requirements section to understand how competitor dynamics are identified and addressed.
Explore detailed insights below in the AI requirements section to understand how competitor dynamics are identified and addressed.
How Should the Software Manage Promotions, Campaigns, and Discounts?
When it comes to campaigns and discounts, a robust pricing software should offer the ability to seamlessly manage and track promotions to ensure that all pricing adjustments align with ongoing campaigns. The system should not only handle internally managed promotions, but also integrate with external campaign data, using it as an input to adjust prices dynamically.
What Should Your RFP Include for Geographic Pricing Capabilities?
Geo-pricing is essential for tailoring strategies to local customer and market needs. Ensure your RFP includes the following:
- Geographic Pricing Differentiation: The ability to create tailored pricing recommendations for the same SKU based on geographic location.
- Hierarchical Pricing Structure: Enables structured hierarchies at the country, zone, and store levels for precise pricing adjustments.
- Store-Specific Pricing: Flexibility to set different prices for various stores based on factors such as local demographics or demand trends.
- Multi-Currency and Regulatory Compliance: Full support for multi-currency pricing and adherence to regulations specific to each country or region.
How Should My RFP Address Inventory and Stock-Level Pricing?
Inventory management combined with effective pricing is crucial because it ensures that stock levels align with market demand, maximizing profitability while minimizing waste or overstocking.
Here are the inventory-related requirements that the pricing software must address:
Dynamic Pricing Based on Stock Levels: The software must enable dynamic pricing adjustments that reflect real-time inventory status, ensuring responsiveness to stock fluctuations.
Automated Markdown Capabilities: Support for automated markdowns on items nearing expiration or with low demand, helping to minimize losses and improve stock turnover.
High Stock Coverage Recommendations:
The system should identify SKUs with high “stock coverage” (inventory levels compared to average daily sales) and recommend discount or liquidation strategies to optimize inventory management.
Low Stock Coverage Premium Pricing: The software must recommend higher prices for SKUs with low “Stock Coverage” or limited supply, capitalizing on scarcity and maintaining profitability.
Should AI Requirements Be Defined in My Pricing Software RFP?
AI is everywhere today, transforming industries and becoming a buzzword in nearly every tech conversation. However, when it comes to pricing software, not all AI capabilities are created equal. Here’s what matters for AI in a pricing software.
Simulation Tools: The software should include simulation capabilities to test various pricing strategies, margin limits, and predict key performance indicators (KPIs) such as revenue, unit sales, and profit.
Sales Data Integration: Ensure integration with sales data to track the impact of past price adjustments and refine future recommendations.
Price Elasticity Analysis: Leverage SKU-level price elasticity data to influence price recommendations and optimize margins.
Competitor Sensitivity Identification: Identify key competitors that influence pricing decisions, allowing for strategic adjustments based on market dynamics.
Product Segmentation: Group products into categories such as Key Value Items (KVIs), sales drivers and profit generators. Use a scoring model based on factors like price elasticity, competitive dynamics, basket-opening rates, and purchase frequency.
A Snapshot of Quicklizard’s Simulation Page
Which Reports Are Essential in a Pricing Software?
Reports and dashboards are essential for transforming raw data into actionable insights, enabling businesses to make informed decisions quickly.
A pricing software must include built-in, user-friendly dashboards and reports that are easily accessible to end users. Standard reporting capabilities should cover critical areas such as historical price levels for each SKU, competitor pricing trends, and sales velocity across various groupings and channels. Additionally, the software should support scenario analysis, allowing users to evaluate the effectiveness of different pricing strategies on total sales, margin, and profitability. And don’t forget customization—the ability to add widgets and graphs at the product level ensures that reports are tailored to unique business needs.
Defining an RFP can be a complex process, but you don’t have to do it alone. Our experts are here to guide you and ensure your RFP covers the critical requirements for the ideal pricing software.
