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Chapter 16 An Enabling Systems Architect... > Incorporating Context into Pricing D...

Incorporating Context into Pricing Decisions through Technology

Incorporating context into pricing decisions through technology involves five major enhancements to pricing processes and their supporting systems. Each addresses the need for more relevant information, better decisions, management control, and operational alignment.

1. Altering the pricing waterfall

2. Enabling price setting with context

3. Refining deal constructs through the holistic integration of sales and pricing

4. Facilitating context-specific pricing approvals

5. Aligning contextual pricing with business operations

1. Altering the Pricing Waterfall

Fundamental to any pricing system is the pricing waterfall, a representation of all the revenue and cost elements contributing to the achieved net and pocket price and profitability of a particular transaction. The pricing waterfall drives not only the design of analytics in a pricing solution but also the algorithm to determine how a specific deal should be priced and how the net and pocket contribution will be modeled. This component affects all three of the core capability areas within a pricing solution. Most companies’ pricing waterfalls today cannot account for the critical dimension of context, however; thus, two key enhancements to the pricing waterfall are required.


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