Manage product pricing overview
Applies to: Dynamics 365 Business Central, Dynamics 365 Commerce, Dynamics 365 Customer Service, Dynamics 365 Field Service, Dynamics 365 Project Operations, Dynamics 365 Sales, Dynamics 365 Supply Chain Management
This article describes how you can use Dynamics 365 to manage pricing and discounts for tangible products that are offered to customers and bought from suppliers.
Managing product pricing is a pivotal aspect of organizational success, influencing profitability and competitive positioning. In today's dynamic business landscape, effective product pricing requires a comprehensive approach, and when using the suite of Dynamics 365 products organizations can achieve these goals. From Dynamics 365 Commerce to Customer Service, Field Service, Project Operations, Sales, and Supply Chain Management, these interconnected tools provide a robust framework for optimizing product pricing strategies.
Dynamics 365 enables organizations to seamlessly align pricing structures with market demands and competitive landscapes, fostering transparent relationships with clients. The suite facilitates agile responses to dynamic market changes, ensuring adaptability and strategic refinement to stay ahead. Specifically, in Dynamics 365 Commerce, businesses can apply advanced pricing models for both business to business (B2B) and business to consumer (B2C) scenarios, across channels such as online, in store, and in the back office, enhancing their merchandising strategies and delivering personalized pricing experiences to diverse customer segments.
The process of managing product pricing involves a series of interconnected business processes crucial for organizational efficiency. Beginning with the definition of a robust product catalog and strategy, organizations can introduce new products seamlessly, strategically positioning them in the market. The management of product pricing involves meticulous determination of prices and eligibility for discounts, ensuring offerings align with market demands.
Simultaneously, defining product costing becomes paramount for maintaining profitability. The holistic approach extends to managing the entire product lifecycle, from introduction to retirement, ensuring continuous refinement and strategic adaptation. This integrated process within Dynamics 365 empowers organizations to navigate the complexities of product pricing with agility and foresight, contributing to sustained success.
In an organization focused on products, especially when downstream processes such as procure to pay, prospect to quote, order to cash, plan to produce, project to profit, case to resolution, service to cash, and/or record to report are part of the Dynamics 365 implementation, early consideration of business processes related to managing product pricing is essential.
The data and output of these processes impact various downstream operations and defining them early in the project ensures overall project success. If Dynamics 365 won't serve as the system of record for product data, integrations to the designated system should be considered early in the planning phase.
Stakeholders
Many people across the organization should contribute to the decision-making process and design of the manage product pricing area. The following list provides examples of such stakeholders:
Product pricing stakeholders include pricing analysts and product managers. Pricing analysts play a key role in analyzing market trends and competitive pricing, contributing valuable insights to shape effective product pricing strategies. Product managers collaborate in determining the value proposition of products and aligning pricing structures with perceived value.
Sales and merchandising stakeholders include sales managers, merchandisers, and retail analysts. Sales managers provide insights into customer preferences, helping tailor promotional pricing for optimal sales performance. Merchandisers collaborate to enhance the merchandising strategy, applying pricing models for both B2B and B2C scenarios.
Finance and costing stakeholders include cost accountants and financial planners. Cost accountants analyze product costing structures, ensuring alignment with profitability goals. Financial planners contribute to the financial analysis of product pricing, assessing its impact on profit margins and financial health.
Product lifecycle management stakeholders include product lifecycle managers and operations managers. These roles are instrumental in managing the entire product lifecycle, from introduction to retirement, ensuring that pricing strategies are adapted to different phases and market demands.
Customer feedback and satisfaction stakeholders include customer success managers and feedback analysts. Customer success managers provide valuable feedback based on customer interactions, contributing to the continuous improvement of pricing strategies. Feedback analysts analyze customer reviews and sentiments to refine pricing approaches.
Regulatory and compliance stakeholders include compliance officers and external auditors. Compliance officers ensure that product pricing strategies align with regulatory requirements and industry standards. External auditors provide an independent assessment of compliance, offering insights into potential risks and improvements.
Manage product pricing process flow
The following diagram illustrates the manage product pricing business process area. Each solid gray rectangle on the diagram represents an end-to-end business process. The solid blue rectangle represents the business process area. The diagram shows the subprocesses for the business process area. The arrows on the diagram show the flow of the business process in an organization. If a subprocess can lead to more than one other subprocess, the parallel subprocesses are shown as branches.
Start
Design to retire
Introduce new products
Manage product pricing
Determine product price and discount eligibility
Create and maintain product fees
A parallel branch connects to Manage product lifecycle, which is under Design to retire on the right side of the graphic
Create and maintain product pricing agreements
Parallel branches connect to Manage vendor relationships, which is under Procure to pay and Manage customer relationships, which is under Prospect to quote
Create and maintain product promotional pricing and discounts
Review product pricing and discount agreements
Run marketing campaigns
End
Manage product pricing benefits
There are many key benefits that can be used to monitor and measure the success of implementing technology to support the manage product pricing business processes. The following sections outline the key benefits that an organization might monitor and measure for managing product pricing processes.
Precision in pricing
Dynamics 365 Sales, Customer Service, and Field Service, combined with robust features from Dynamics 365 Supply Chain Management, deliver enhanced pricing accuracy and efficiency. The platform's product catalog allows users to define pricing swiftly and accurately. Automated pricing engines ensure transactional accuracy, minimizing pricing errors and streamlining the entire process.
Key performance indicators (KPIs) such as reduced pricing discrepancies, improved quotation turnaround times, and increased customer satisfaction can help measure the benefit. When you use more than one Dynamics 365 product you can quickly and easily synchronize the pricing data using Dual Write or Virtual entities depending on your organizational business requirements.
Agility in response to market changes
Dynamics 365 facilitates an agile response to dynamic market changes, integrating seamlessly with external tools and leveraging Azure Data Lake with Azure Synapse Link. Data-driven insights and predictive analytics through Power BI and Machine Learning empower organizations to swiftly adapt pricing strategies.
KPIs, including time-to-market for adjusted pricing and frequency of pricing updates, measure the effectiveness of this benefit. By staying ahead of market trends, organizations maintain competitiveness and capitalize on emerging opportunities.
Transparent and compliant purchase and sales agreements
Dynamics 365 ensures transparent and compliant agreements with both customers and vendors, which is crucial for organizations navigating complex regulatory landscapes. By using purchase agreement and sales agreements in Dynamics 365 Supply Chain Management, organizations can gain visibility into terms, conditions, and compliance requirements. Basic agreements can be used across applications, synchronized to Dynamics 365 Supply Chain Management or Project Operations.
KPIs, such as contract compliance rates and audit success, gauge the effectiveness of this benefit. Transparent and compliant agreements foster trust with clients, mitigate legal risks, and contribute to long-term success.
Strategic implementation of promotional pricing
Dynamics 365 Supply Chain Management and Commerce empower organizations to implement optimal promotional pricing strategies, enhancing market presence and driving sales. The platform's pricing and discounting engine can integrate with Dynamics 365 Customer Insights Data and Journeys data for targeted promotions aligned with customer behavior.
KPIs measuring the impact on sales revenue, customer acquisition rates during promotions, and the ROI of promotional campaigns assess the success of this benefit. By fine-tuning promotional pricing, organizations maximize the impact of marketing efforts and gain a competitive edge.
Continuous improvement through analytical insights
The combination of Dynamics 365, Power BI, and Azure Data Lakes with Azure Synapse Link enables continuous improvement in product pricing strategies. Data-driven insights identify trends, assess pricing structure performance, and refine strategies.
KPIs, such as the rate of pricing strategy optimization and the impact on profit margins over time, measure this benefit. Fostering a culture of continuous improvement ensures that product pricing remains responsive to market dynamics and evolving business needs.
Pricing precision across channels
Dynamics 365 Commerce introduces a specialized benefit in the form of omni-channel pricing capabilities, enhancing precision and consistency across diverse sales channels. The platform seamlessly integrates pricing models for both B2B and B2C scenarios, ensuring a unified pricing strategy. With centralized control overpricing across online and offline channels, organizations achieve consistency in customer experiences.
KPIs such as cross-channel pricing uniformity, the impact of pricing on customer satisfaction scores, and the percentage increase in sales across different channels can be used to measure the effectiveness of this benefit. Dynamics 365 Commerce empowers organizations to deliver a seamless and optimized pricing experience, strengthening customer loyalty and driving revenue growth.
Next steps
If you would like to implement Dynamics 365 solutions to assist with your manage product pricing business processes, you can use the following resources and steps to learn more.
Manage product pricing (the article that you're currently reading).
Related resources
You can use the following resources to learn more about the manage product pricing processes in Dynamics 365.
Use the Dynamics 365 Commerce pricing engine with Dynamics 365 Sales
Pricing management overview (preview) - Supply Chain Management
Contributors
This article is maintained by Microsoft. It was originally written by the following contributors.
Principal author:
- Rachel Profitt | Principal Program Manager
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