One of the most important aspects of any business is pricing. According to a recent article on CFO nearly 30% of all pricing decisions made fail to give companies the best bang for the buck. That’s a large amount of decisions that are going awry for businesses.
In a global marketplace where the slimmest of margins often are the difference between success and failure, it’s more important than ever that companies get pricing right. Quite frankly, unless it’s a very large business, they simply can’t afford to keep getting it wrong so frequently.
Fortunately for CFO’s there’s big data platforms . This technology should bring a smile to every single CFO because it makes their job much, much easier. The reason that companies get so many pricing decisions wrong is because pricing is extremely hard to do. And when we say get pricing wrong, it doesn’t mean that everyone stops buying that thing. It just means that fewer people buy it than if it were correctly priced.
A company might think it’s fine since people are still buying its stuff. When really, it could be doing so much better if the pricing were tweaked.
With tens, hundreds and even thousands of factors to weigh when it comes to pricing something, it’s easy to get it wrong. With big data, however, the CFO has the tools to get pricing right nearly every time. The most difficult part, gathering and analyzing the data, is done by big data and it’s done at an extremely large and accurate level.
To illustrate how big data can help CFO’s, specifically with pricing, let’s look at some of the factors that the money execs have to worry about and how big data simplifies the process.
Location makes pricing very, very difficult. It’s one thing to have a few brick-and-mortar stores in the same city or state. It’s a completely different thing when you’re spread out across the country or across the globe. Simply put, people in New York City are going to expect and pay a different price than people in San Antonio or Bangkok.
With traditional data techniques, finding the right pricing for the right locations is extremely difficult. With big data technology the process is simplified immensely. Big data can bring together a whole heap of factors to help you choose the right price for the right location.
Just like location, it can be very difficult to make the right seasonal pricing decisions. Again, with companies spread out across the country or state this becomes extremely difficult. In many places you’ve got four distinct seasons — winter, spring, summer and fall. In other places you’ve got one or two season. Then you add in winter holidays, back to school, end of school, New Year’s, Valentines and a host of other events and holidays and you’ve got a very difficult task.
There are different expectations for each holiday and season and people are willing to pay different prices for each one. Big data analytics can help you get your seasonal pricing right.
3. Competitor Pricing
It’s important to keep up on what the competition is doing. It’s vital in fact. There’s no better way to do that than with big data. It can not only gather information from thousands of stores across the web and world, but it also analyzes that information to give companies something they can make sense of.
4. Mobile Apps
Mobile apps are doubly important when it comes to pricing. First, it’s important that companies get their app pricing right, if it’s a paid app. It’s amazing what a $1 difference can make when it comes to the cost of an app, let alone $5 to $10. Because so many people are going mobile, it’s more important than ever that companies get their apps downloaded, but it has to be at the right price.
The opposite side of the mobile app discussion is the importance of using these apps in generating important data and feedback for companies to use. Truly mobile apps are some of the best tools companies have to monitor operations and find areas to improve, especially with pricing.
It’s important then that companies get pricing right on their apps so they can bring in sufficient revenue, but also so they can get sufficient usage to ensure high data gathering.
As a CFO you have an immense responsibility to give your company the best chance to succeed. By smartly implementing big data technology you can drastically improve pricing across the board.