One of the biggest challenges for pricing professionals – especially those who work for technology companies – is the lack of control over a coherent pricing strategy.  At PROS, we see quite a few technology companies experiencing accelerated price erosion among their products, primarily due primarily to shorter product lifecycles, an ever-more sophisticated buyer, and overall economic uncertainty and volatility.

The lack of a clear and consistent pricing strategy is often demonstrated by the absence of proper pricing guidance to field sales. Without proper pricing guidance based on a pricing strategy, field sales people tend to request pricing based on customer demands, perceived competitive responses, intuition and emotion.  Without a disciplined price-setting strategy, companies can easily end up accepting too many price approvals via exception. The exception process then becomes an emotional internal struggle that ultimately results in very low pricing in the name of competitive matching. It’s a perfect storm that greatly increases the risk for an acceleration of price erosion due to inconsistent price approvals and confusion between the pricing team and field sales.

To help take back control of pricing, technology companies are finding ways of gaining better insight into list-price setting and automated methods to determine price-guidance targets for negotiated deals. Fortunately, pricing software can help create a consistent pricing framework based on objective measures. Companies can then use pricing software tools to establish logical, price-band ladders for a product group. This will slow the rate of price erosion and ultimately give organizations higher revenues, while protecting market share.

Here at PROS, we’ve developed a new white paper titled “Price Erosion Challenges for Technology Companies:  A Better Approach with Pricing Software.” It describes how companies can address the issue of accelerated price erosion through the adoption of software pricing tools.  We invite you to download it free at http://www.prospricing.com/Resources/White-Papers.aspx.