Ensuring you have sufficient operational agility to enable your company to react quickly when pricing changes are required is critical.
Is your organisation reviewing its pricing as the business costs continue to rise? If you answered in the affirmative, then join the club.
For most Australian business owners, the Australian Bureau of Statistics’ announcement that inflation had hit 6.1 per cent in the June 2022 quarter confirmed what they already well knew: that everything from office stationery to freight had gotten more expensive in recent times.
Across the country, they’re now crunching the numbers, analysing the rising costs they’re absorbing and considering the likely impact on customers if, or rather when, those costs are passed on, partially or in full.
Big picture pricing
Instead of merely upping your current list prices by what feels like an acceptable percentage, it may pay for you to take a more holistic approach to the way in which you bill for your products and services.
Implementing a billing solution will allow you to have a platform that supports usage-based consumption, dynamic pricing, and formula-driven billing models while freeing up operations and finance teams across the company to concentrate on higher-value work.
Here are some of the benefits that can result from adopting this approach.
A better understanding of customer expectations
Do you know what your customers are looking for when they hand over their hard-earned cash and how satisfied they are with your current offering? Unless your organisation polls them regularly, the answer is probably ‘not all that well’. A revenue management strategy will remedy that deficit because it entails ongoing data capture and research. Increasing your understanding of your target market’s expectations will enable you to modify and enhance your range and introduce new offerings that address customers’ unmet and emerging needs.
Sharper segmentation
That market intelligence will also allow you to identify and target potentially profitable new market segments and make your goods and services available to customers in different ways.
Rather than selling highly-priced equipment outright, for example, you may choose to adopt a usage-based pricing model. This might mean customers accessing or renting items from you for a minimum monthly charge and paying a separate fee based on how frequently or heavily they use them.
Alternatively, you could decide to utilise the data you collect to introduce dynamic pricing. Just as ride-sharing services such as Uber and Lyft charge more than the regular upfront fare when demand is high, and drivers are in short supply, you might opt to offer prices which rise and fall in line with market demand.
More competitive pricing
Diving deep into the data may also help you decide what those prices should be if you gain market share and increase profitability. It can be a delicate balance to strike and depending on the nature of your enterprise, and where it’s at in its business life cycle, you may decide to prioritise one of these goals at the expense of the other.
Knowledge is power and having that knowledge at your fingertips allows you to make the choices that will drive your organisation in the right direction.
Turning to technology
These things are impossible without the right tools – cloud-based revenue management software that covers the revenue cycle from end to end and integrates seamlessly with the SAP or Microsoft Dynamics ERP solution that powers your business.
It’s a foundation technology that allows you to capture and consolidate usage data, integrate it with systems that track and manage your customers and extract actionable insights to inform strategic decisions about products and pricing – decisions that will help your organisation achieve its key performance indicators.
If you’re serious about building stronger brand awareness, increasing revenue, profitability and customer loyalty, and gaining a competitive advantage in the current inflationary climate, it’s an investment you can ill afford not to make.
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