Blog, Pricing

Hot Take: Don’t Use Excel to Manage Your Pricing

By David Anderson
March 2, 2020

Early in my career, I was tasked with building and leading a new pricing team at a Fortune 500 company. One of the first things I did was build a MSExcel-based pricing model for pricing decision evaluation. I moved along to other areas of focus, but I do know that 10 years after building that “Price Analysis Model,” it was still being used on a daily basis by most anyone evaluating pricing in that company.

I used to consider it a point of pride that I’d created such a lasting, relevant resource that far outlived my direct involvement it it’s day-to-day use. Today, well … my opinion about that fact has changed.

I’m going to say this as straightforward as I can. If you’re a business that has more than $50M-$100M in revenue, you should not be managing your pricing information or evaluating your customer pricing decisions in Microsoft Excel. That might seem obvious advice to some, but day after day I meet with huge companies (Global, Fortune 500, billions in revenue) that continue to use Microsoft Excel to manage pricing.

Pricing is mission critical, probably the most important information in your business. Why don’t you have proper IT infrastructure to manage this information? Your finance team, your procurement team, your HR team, they probably all have a platform for managing their information and shareholders care about pricing equally as much (and arguably more!).

Given that MOST big companies I know are using offline systems to manage price information (based on my experience I’d estimate >85% of the fortune 500 do most of their price setting and analysis  in Excel), I thought I’d pen a polite rant on the topic.

6 Reasons to Invest in Proper Pricing Tools

  1. Auditability & Controls. Don’t tell your Sarbanes Oxley auditor friends, but if you are working in excel, there is likely no version history or controls on who is editing what in whatever file is sitting on Sally’s laptop in Poughkeepsie. A proper system controls who has access to pricing data (because it’s need-to-know only) and logs who makes changes, and when.
  2. Historical Record. If you’re managing pricing in Excel, chances are you have no historical record of past prices. Billings systems are better these days, but I still run into systems that only know what the current price is, not what it may have been yesterday or months ago.
  3. Reliable Data Flow. If you are pricing in MSExcel, there is s 95% chance you are assembling data for pricing work with dataset merges and lookups and all sorts of data prep techniques that are prone to error. Proper systems automatically aggregate, classify, and deliver data into pricing process.
  4. Manual Data Transfer Into Billing. Are your analysts spending days of effort formatting data for insertion into other billing systems? Are the prepping and validating CSV files for days on end? Manually uploading data into ERP systems or databases is error prone, time consuming, and should be automated, which is one outcome of a pricing system.
  5. “It’s Different Every Time.” If you are letting analysts randomly design their personal pricing processes in excel, you are not setting up for success. Reliable, repeatable processes, and broad capabilities to implement pricing strategies are characteristics of proper systems, not custom-design spreadsheet analyses. If you have tried to operationalize a process with MSExcel, well, as my friends in Texas would say, “bless your heart.”
  6. Security. If your mission critical pricing information is in MSExcel, it is completely portable and able to walk right out the door.

MSExcel is better than a pencil and pad of paper, and it’s certainly better than nothing, but don’t think there is not a better way!  If you are managing your mission critical data in MSExcel, consider a professional, enterprise grade pricing system. Businesses that invest in systems not only fix Excel madness, they always realized substantial ROI and boost revenues by making better pricing decisions.

If you’re curious about pricing software with capabilities (and ROI) that extend far beyond Excel, download our Buyer’s Kit for Pricing Software.

 

  • B2B Pricing , Microsoft Excel

    David Anderson

    David Anderson is a Boston-based Business Consultant with Vendavo. He has spent the last 15 years working inside companies to advance their strategic pricing agendas. Dave is a manufacturing engineer by training (BS, MSE from Kettering, Purdue), has an MBA from Harvard Business School, and he has had the great privilege of learning pricing by working and interacting with many fantastic pricing experts over the course of his career.