The Journey of Digital Transformation in Pricing: From Automation to Data Intelligence
- 14 de nov. de 2024
- 4 min de leitura
Digital transformation is redefining how companies operate, and Pricing, a crucial function for profitability and competitiveness, is no exception. However, unlike what many may think, digitalization in Pricing is not an isolated project or a short-term goal. It is a continuous journey that guides the company through increasing levels of maturity and the ability to make faster, more precise, and better-informed decisions.
In this article, we will address the three main stages of the digital transformation journey in Pricing, from the initial steps with internal data to the use of advanced tools like artificial intelligence and machine learning. More importantly, we will demystify the notion that digitalization in Pricing is only for technology specialists, showing that any company can embark on this journey and reap benefits, regardless of its current level of maturity.
The Importance of Digital Transformation in Pricing
Historically, many companies approached Pricing manually, relying heavily on spreadsheets and limited departmental integration. This approach, besides being prone to errors, constrained their ability to adapt to market dynamics. However, with digitalization’s advancement, companies began realizing that automation and data utilization enable more efficient and strategic decision-making.
A study by McKinsey & Company reveals that companies leading in digital maturity achieve EBITDA growth rates up to three times higher than others.
These organizations, which leverage digital solutions as catalysts for efficiency and accuracy, can not only respond to market changes but also strategically anticipate them. In Pricing, this advantage translates into more detailed data analysis and more accurate pricing, potentially yielding profit margin gains of 2% to 7%. By integrating robust digital practices, companies have the potential to enhance their competitiveness and solidify their market positioning.
The Three Stages of Digital Maturity in Pricing
1. Beginning: Organizing Data and Reducing Manual Processes
The first step in the digital transformation journey in Pricing is to organize and consolidate internal data. Here, basic tools like dynamic spreadsheets still play a role, but the primary focus is to ensure the company has a clear and centralized view of its pricing data. Companies that still rely on manual processes can quickly benefit from small advances, such as extracting data directly from ERP systems (like SAP or TOTVS) for analysis at the invoice line level.
Transitioning to this stage doesn’t require deep programming knowledge or complex systems. Any Pricing professional can begin suggesting improvements, such as creating centralized databases, which help the company better understand profit margins, product mix, and customer behaviors.
2. Intermediate: Automation and Integration
In the second phase, companies begin investing in automating repetitive processes, eliminating the need for manual data entry or constant spreadsheet calculations. Simple automation tools, like Python scripts or ERP integrations, help optimize data collection and processing, freeing up time for more strategic analysis.
Companies reaching this stage start to notice a significant improvement in the accuracy of their Pricing decisions. Additionally, with fewer manual tasks, the team can devote more time to analyzing pricing opportunities and adjusting strategies based on market benchmarks.
3. Advanced: Predictive Analytics and Artificial Intelligence
The most advanced stage of digital maturity in Pricing is marked by the use of technologies like machine learning and artificial intelligence to predict market trends and adjust prices in real-time. In this phase, companies not only react to changes in demand and competition but also use historical data and predictive models to anticipate consumer behaviors and optimize profit margins.
Although technically more complex, this stage is accessible to any company that has gone through the previous stages of data organization and automation. AI and machine learning may seem distant to some professionals, but today’s market offers a variety of tools and platforms that make these technologies increasingly easy to implement, even without large IT teams.
Two-Way Digitalization: Integration of Internal and External Data
Integrating internal and external data is essential to maximize the value of Pricing strategies. Companies that have already digitalized their internal data can take the next step by collecting and analyzing external market information, such as competitor movements and pricing trends.
Additionally, understanding customer value perception and willingness to pay is crucial. These insights can be digitally collected through satisfaction surveys or sentiment analysis on social media and other digital platforms. By combining internal performance data with external expectations and perceptions, companies can generate more comprehensive insights to set more accurate prices.
According to the article “Digital Pricing Transformations: The Key to Better Margins” by the Professional Pricing Society, integrating internal and external data enhances the agility and intelligence of pricing processes, enabling real-time adjustments that strengthen competitiveness. The PPS emphasizes that this synergy between internal data—such as sales history and costs—and external market information provides a solid foundation for strategic decisions, increasing pricing accuracy and adaptability.
The Journey Doesn’t End Here
The digital transformation in Pricing is a continuous journey. Even companies that reach an advanced level of maturity must keep refining their processes and adjusting their tools to keep up with rapid market changes. Digitalization is not the end goal but rather a means to more strategic and efficient pricing.
Integrating internal and external data is essential to strengthen pricing strategies and make faster,and more accurate decisions. Adopting robust digital practices results in dynamic pricing, enabling companies to better adapt to market changes. By implementing these practices, organizations can quickly respond to competitor movements and adjust prices in real-time, consolidating a competitive advantage.
Ultimately, digital transformation offers companies the opportunity to optimize processes, integrate data, and enhance decision-making accuracy. On this journey, the ability to leverage data from multiple sources and automate processes will be a crucial differentiator to maintain competitiveness in an ever-evolving market.
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