DM06: Proactively and efficiently set a price for updated product (Cost / Competitor price or other changes trigger repricing)

Pricing Manager

Business objective:

Set or adjust proactively List Prices for a new or existing product as soon as there is a significant change e.g. product is launched or status has changed, Change in cost, competitor price or low margin performance of the product. 

Manual price calculations on an ad hoc basis when and if a change is recognized resulting in lack of price consistency and risk of errors.

Receiving proactive notification if a change is for an existing product occurs, triggering the re-calculation in line with pricing strategy and allowing for seamless execution back into ERP system.

• No time delay between product being sellable and price being available

• Possibility to react / recalculate List Price based on price relevant changes immediately

• Lower risk of manual failures

• Implement dynamic pricing

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In the process industry, the process of making price changes due to updates within the system (such as cost information, competitor pricing, or other data) is typically a very manual one. It requires a lot of input from external sources and a team that has access to specific information to be able to process these changes. Unfortunately, there is limited visibility when these changes happen, which can result in extended delays to reflect cost increases or consistent price increases. In order to address this, we need a system or solution that provides quick visibility into these changes as they occur, executes actions, and provides notifications to the user. This would make it much easier to understand when changes occur and how they will impact pricing.

The benefits of such a system include being more dynamic and able to react to changes more efficiently, having a better understanding of the impact, and being able to adjust prices with clearer visibility of how those new prices will be executed. Additionally, having an automated system would reduce the risk of manual failures and the need for additional work.

Now let’s have a look at how this can be done effectively in Pricefx.

Let's take a closer look at how we can notify users of cost increases and how this will be reflected in the price creation process in the system. First of all, you have access to any to-do items in your landing page, so Pricefx is able to create notifications for you. In this case, it will detect that there has been a cost increase. This cost increase can be reflected due to information that's being fed into the system from an external source.

The system is able to monitor those data feeds and identify when there's been a change; in this case, a change related to cost increases. One of the first things you'll be able to do is use the notification that says there's been a cost increase detected. Then, you can review the impact and process for price adjustment. The system will provide you with access to the item that has been created, reflecting those cost changes.

For the purpose of this tutorial, we are going to open up a price grid that has a list of products where there has been a cost increase. You can see that these two products have been added dynamically into this price grid.

We have access to a lot of information, but what's going to be important in this particular case is being able to see the previous cost and the new cost, which is what triggered the price recalculation process. To do that, we are going to take a look at the details for this product and navigate to our product cost parameter table.

Here, we'll filter for the specific product and look at the global cost information. You can see that there are two records with two different dates. The previous cost was €48, and the new cost is €48.48 starting January 1st of this year. If we go back to our price list, we can confirm that the old cost was €48 and it has been increased to €48.48.

This has triggered a new recalculation, where the active price is now €123. If we use the new cost, it will change our price to €99.38 using the cost+ strategy. It's possible that this active price was determined using another strategy, but in this case, we have the ability to make any adjustments for the cost change into the price of the product.

If you take a look at the second item in the list you can essentially apply the same steps: navigate back and apply the filter, we can see two cost values, €75 increasing to €76.75 at the global dependency level. We can go back into our price grid and confirm those price adjustments here. Now that we see these cost increases again, we can take a look at the different strategies available and select the most appropriate one. We can use a competition-based strategy, continue with cost+, or use any of the other strategies available in the system.

From this point on, we can make any necessary adjustments, whether it's a price override or changing the selected strategy. Then, we'll submit it for review and approval. This will create a request for review, and if the price is approved, it will be loaded into the system.

That's the process you can follow within Pricefx to be notified of cost changes. We can also extend this functionality to any other attributes available within the system, such as inventory information or index data that will impact the price of a product, or any relevant market conditions. This way, the pricing team can quickly react to those changes and take action within the price list from a notification on the landing page. Once the action is completed, they can mark it as done and continue with their work.

This step concludes the flow for proactively and efficiently setting a price for updated product (Cost / Competitor price or other changes trigger repricing) in Pricefx.