The future of software pricing excellence: Transaction pricing management

Transaction pricing management practices, from laggards to leaders

PwC has identified the characteristics that define the leaders, laggards and mainstream practitioners of software transaction pricing management. Laggards typically lack defined processes and chains of command for making decisions about transaction pricing, and, as a result, they have little data on which to base market predictions and pricing trends. Leaders, however, have create a closed loop in which they create formalised processes for capturing data about every aspect of the transaction, then use that data to further refine the processes for optimal pricing strategy.

The key factor separating industry leaders in transaction pricing management from the pack is a fully integrated, cross-functional approach that captures and leverages data about past deals to inform future deals.

A structured approach to building a transaction pricing management frame for the software industry requires four key elements:

Using the price waterfall framework to identify and close profitability leaks
  • Designing a price waterfall;
  • Defining analytics; and
  • Policy and governance definition and enforcement.

By investing time and effort up front to carefully design a transaction pricing management framework, software vendors can turn transaction pricing management into an engine that preserves or expands margins, encourages future revenue growth, increases the ease of doing business and ultimately provides a differentiated customer experience.

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