Increased Revenue

Evidence and data. Interviewees highlighted that PROS helped their organizations gain visibility and control over their pricing strategies and provided them with the ability to deliver market-relevant prices with greater speed, which increased deal conversions and revenues.

• The vice president of business transformation at the distribution organization remarked that by managing and optimizing the organization’s prices with PROS, it could capture inflationary aspects of the market that would have been left on the table otherwise. 

• The director of pricing at a healthcare organization shared that PROS helped their firm understand drivers of revenue, fine-tune pricing strategies, implement corresponding pricing changes, and monitor sales data to ensure that the latest prices were being used. They said, “We make more money because we can control our prices better.”

• Similarly, the division pricing manager at an agricultural retail organization noted that PROS provided their firm with greater visibility and analytics of its pricing strategies and that this enabled leadership to make pricing adjustments based on changes in the market and to set pricing rules for salespeople to ensure consistency.

• One interviewee noted their firm’s margins increased by 0.5 percentage points immediately after implementing PROS and that this steadily increased to more than 2 percentage points during the following 1.5 years of use.

• Interviewees said that as a result of the pricing visibility, analytical capabilities, and process improvements driven by PROS, their organizations experienced uplifts in revenue. The pricing manager in the refined fuels industry said their organization increased its revenue by $9 million within the first year of implementation. The division pricing manager at the agricultural retail organization said their company saw a 4.4% revenue increase for its largest offering under management within PROS. The director of pricing at the healthcare organization shared that PROS helped to identify 2 million to 5 million pounds of revenue leakage every year, which it was able to retain.

Modeling and assumptions. Based on the interviewees’ experiences, Forrester assumes the following about the composite organization:

• The composite’s annual companywide revenues before using PROS were $3 billion.

• The percent of revenue under management of PROS is 15%, 20%, and 25% in Year 1, Year 2, and Year 3, respectively.

• PROS increases the composite’s revenue by 2, 2.5, and 3 percentage points in Year 1, Year 2, and Year 3, respectively.

• The composite’s product profit margin prior to PROS was 10%.

Risks. Forrester recognizes that these results may not be representative of all experiences and that the impact may vary depending on:

• Adoption of PROS by the organization’s salespeople.

• Various economic factors.

• The organization’s previous profit margins.

• The organization’s industry.

• Changes in the organization’s product or offering portfolio.

Results. To account for these risks, Forrester adjusted this benefit downward by 25%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $2.8 million.

Improved Profit Margin

Evidence and data. Interviewees found that PROS helped their organizations improve pricing accuracy and react to shifting market dynamics faster, which they said ultimately enabled their firms to protect and grow profit margins.

• The two interviewees from a refined fuels organization said PROS helped the company’s pricing team to avoid errors and quickly address competitive issues or opportunities. By moving away from spreadsheets and manually driven pricing decisions to an intelligent pricing tool, the organization avoided situations in which pricing miscalculations occurred and margin was left on the table. Additionally, because the organization needed to update prices daily based on constantly shifting market factors, PROS was essential for efficiently assessing market and competitive data and making informed pricing decisions to optimize margins.

The pricing manager at the refined fuels organization said: “PROS tied together data in order for us to build meaningful connections that we didn’t have the ability to do very easily before. … PROS is really analyzing our strategies and the areas that we can try to squeeze out a little more margin. It helps us find opportunities whereas, before, we just didn’t have the visibility.”

• The division pricing manager at the agricultural retail organization noted that pricing guidance from PROS helped their firm take advantage of market opportunities, which improved its margins. The interviewee shared that PROS enabled their organization to analyze and adjust prices upward when it found itself with inventory in short supply. By being able to quickly set a market-driven price and update guidance for sellers across regions, the organization captured margin gains for inventory that increased in value. The interviewee noted that organizations in regions that adopted PROS saw much higher growth margins than those in regions that had not, and they cited a 3% increase in margin for one of the first regions to adopt the solution.

• The vice president of business transformation at the distribution organization said their firm experienced an immediate increase in margins which continued to increase during the following 1.5 years of use with PROS. The interviewee remarked that by managing and optimizing the organization’s prices with PROS, it could capture inflationary aspects of the market that would have been left on the table otherwise.

• The director of pricing at the healthcare organization highlighted that PROS helped their firm’s pricing staff analyze the services the company was selling and other financial data to drive margin-protecting decisions. They said: “Our improvement of margin is not only due to us being able to change prices, but also because we are now able to analyze what we are selling. We use PROS’s analytical tools and our data to run deep dives of what we are selling so we can make calls on whether we should continue doing certain procedures.”

Modeling and assumptions. Based on the interviewees’ experiences, Forrester assumes the following about the composite organization:

• The composite’s total revenue under PROS management is $459 million in Year 1, $615 million in Year 2, and $772.5 million in Year 3, which includes the incremental revenue in Benefit A.

• For revenue managed with PROS, the composite increases its profit margin by 0.500, 0.625, and 0.750 percentage points in Year 1, Year 2, and Year 3, respectively.

Risks. Forrester recognizes that these results may not be representative of all experiences and that the impact may vary depending on:

• The adoption of PROS by the organization’s salespeople.

• Various economic factors.

• The organization’s previous profit margins.

• The organization’s industry.

• Changes in the organization’s product or offering portfolio.

Results. To account for these risks, Forrester adjusted this benefit downward by 25%, yielding a three-year, risk-adjusted total PV of $7.2 million.

Productivity Lift For Pricing Team

Evidence and data. Interviewees shared that PROS significantly reduced manual pricing work and the number of inquiries from salespeople and customers, which improved productivity for their organizations’ pricing teams.

• Two interviewees highlighted how PROS reduced labor associated with pricing updates. The pricing manager at the refined fuels organization noted that their firm’s ERP data automatically integrated into PROS instead of needing to be manually extracted and loaded into pricing spreadsheets and that price calculations could be generated at scale as opposed to being manually determined. These automated processes reduced daily pricing work from more than 9 hours to 10 minutes or less. Similarly, the division pricing manager in the agricultural retail industry noted that their organization avoided manual ERP data management and pricing update work within spreadsheets. They said their firm saved 3 to 4 hours of review and update work across its 80 pricing sheets by automating price-point management processes.

• The director of pricing at the healthcare organization shared that their company would have needed to hire 15 additional resources to properly manage its volume of price points and regulatory mandates. Additionally, they said the PROS e-commerce integration enabled pricing updates to be reflected on the company’s website, which saved a week’s worth of labor per price change. They shared: “We were reliant on a team to updates prices on the website manually. It took days. Now, we don’t have to worry about it and [we] know that when we change prices, it’s live everywhere.”

• The division pricing manager at the agricultural retail organization noted that both customer complaints and inquiries from sales representatives collapsed because prices became more consistent and less errors occurred. They shared that before using PROS, pricing managers typically dealt with five customer issues and five to 10 sales interactions per day. With PROS, they said the number of customer complaints and sales inquiries decreased to an average of five per week and two per day, respectively.

Modeling and assumptions. Based on the interviewees’ experiences, Forrester assumes the following about the composite organization:

• The composite’s pricing team is comprised of four resources.

• The burdened hourly cost of a pricing resource is $40, which Forrester calculated by adding an additional 35% to the base salary.

• Before adopting PROS, the composite’s pricing resources dedicated 8 hours to pricing updates daily. With PROS, they spend 10 minutes on pricing updates daily.

• Before using PROS, each pricing analyst dealt with an average of five pricing issues from customers or sales representatives each day.

• With PROS, each pricing analyst deals with one pricing issue per day.

• Each pricing issue requires 15 minutes to manage.

Risks. Forrester recognizes that these results may not be representative of all experiences and that the impact may vary depending on:

• The frequency of the organization’s pricing updates.

• The number of price points the organization manages.

• The burdened cost of the organization’s pricing resources.

• The complexity of pricing issues and the typical time to resolution.

Results. To account for these risks, Forrester adjusted this benefit downward by 10%, yielding a three-year, risk-adjusted total PV of $275,500.

Unquantified Benefits

Interviewees mentioned the following additional benefits that their organizations experienced but were not able to quantify:

• Reduced time to onboard and train resources. The interviewees highlighted how PROS reducing training and onboarding time for new pricing analysts and salespeople.

  • The pricing manager at the refined fuels organization shared that training time for new pricing analysts on PROS is significantly shorter compared to training on its previous pricing spreadsheet and that training time reduced from 40 hours to 3 hours. The interviewee also noted that in its previous state, it would take three months to trust a new analyst to properly use the pricing spreadsheets. But they said with PROS, the chance of user error is comparatively lower.
  • The vice president of business transformation at the distribution organization noted that onboarding and training for new sales representatives is also lower compared to with its prior tool, and they said PROS made it easier to understand the organization’s pricing strategies.

• Reduced risk of error. Interviewees’ organizations reduced the risk of pricing errors by replacing manual pricing work with automation. The division pricing manager at the agricultural retail organization said: “Because everything is integrated and automated, there is no risk of copying a product in the wrong column or typing 20 cents instead of $2. We didn’t have controls over it before or time to manually validate prices. Now, we have all the bells and whistles for that internal to PROS, so were de-risking a lot.”

• Improved access to data and analytical capabilities. Interviewees noted that PROS provided their organizations with a wealth of data and analytical capabilities that were previously unavailable. The director of pricing at the healthcare organization highlighted that PROS helped pricing staff leverage performance, market, and competitive data to strategically optimize prices. Similarly, the director of pricing and economics at the refined fuels organization said PROS enabled their firm to connect disparate data to drive analytical work. For example, they shared that their organization could test ideas or theories with PROS to analyze projected sales impacts and price elasticity.

• Better pricing communication with stakeholders. Interviewees shared that their organizations are better positioned to explain rationale behind pricing decisions, which saves time for pricing analysts and improves stakeholder confidence.

  • The director of pricing at the healthcare organization said: “When we changed prices before, sometimes hospitals would complain, and then we would have to go into a discussion as to who’s right without really knowing for sure. Thanks to PROS, we can easily share profitability information to drive those conversations.”
  • Similarly, the pricing manager at the refined fuels organization said, “PROS brought a lot of facts to the conversation where, before, it might have been more [based in] opinion or would have been a lot more strenuous to bring those facts through the conversation.”

• Cost savings due to legacy technology decommissioning. The vice president of business transformation at the distribution company highlighted cost avoidances associated with sunsetting their firm’s legacy pricing optimization solution. By decommissioning the prior solution, the organization avoided more than $1 million in licensing, upgrade, and maintenance costs.

• Ability to manage pricing-related regulatory requirements. The director of pricing at the healthcare organization said their company  previously incurred a fine associated with industry pricing regulations and that this was a key driver in deciding to adopt PROS. The interviewee said without the assistance of PROS, it would be nearly impossible to manage the organization’s pricing requirements as dictated by the regulation and that the risk of additional fines would be greater.

• Improved customer experience. Interviewees noted that their organizations improved their buyer experiences as a result of being able to turn around accurate and optimized prices more quickly for sales teams. For example, the pricing manager at the refined fuels organization shared that customer dissatisfaction and the number of complaints due to pricing mistakes significantly reduced with the move to PROS.

Flexibility

The value of flexibility is unique to each customer. There are multiple scenarios in which a customer might implement PROS and later realize additional uses and business opportunities, including:

• Added value through integration with PROS Smart Configure Price Quote (CPQ) solution. The director of pricing at the healthcare organization said their firm saw value by using the PROS CPQ solution alongside the pricing optimization solution. They said: “The [price optimization and management solution] provides price control and regulatory oversite. [PROS] CPQ enables sales efficiency and also supports the regulatory oversite. So, there’s consistency with how we calculate a price and give it to the patient. And there’s consistency in the actual document that is given to a patient, and all of the legal parts that it needs to have in it.”
  
  The vice president of business transformation at the distribution organization noted that their firm plans to adopt the PROS CPQ solution in the future to gain quoting approval workflows.

• Additional revenue growth through accelerated time to quote. The vice president of business transformation at a distribution organization expected that PROS and CPQ could help improve their firm’s win rates by shortening the time to quote. Instead of looking across spreadsheets and disparate data to determine appropriate prices, salespeople could access real-time price guidance to quickly deliver quotes to prospects.

• E-commerce integrations. The director of pricing at the healthcare organization noted that PROS’s e-commerce integration enabled updates in pricing to be reflected on their company’s website. The pricing integration helped the organization to be well-positioned to handle increased volumes of self-pay patients during the COVID-19 pandemic. As omnichannel selling continues to grow, integrations with PROS (e.g., its e-commerce API) enable organizations to harmonize prices across channels to capture new opportunities for revenue.

Flexibility would also be quantified when evaluated as part of a specific project (described in more detail in Total Economic Impact Approach).