Vendavo Glossary

Deal Price Optimization

What is Deal Price Optimization?

Deal price optimization is the ability to use historical sales data, Artificial Intelligence (AI) / Machine Learning (ML), and business expertise to produce the most effective pricing based on segmentation and discounts to enable sales teams with improved prices and negotiations. 

Also often referred to as deal optimization or price optimization. 

Why is deal price optimization important? 

Price optimization covers a wide range of different factors and companies looking to ensure their prices are fully optimized will manage. To influence your pricing strategy, the ability to understand your prices and risks associated with changes. 

Providing optimal price points to sales teams delivers the best possible profits for the company and may also achieve additional goals such as assisting in improving the company’s market share or enabling expansion into previously unexplored markets. 

Benefits of deal price optimization: 

  • Maximize sales and profits. Create consistency in your deal process. Customers perceive value in their own way, something that is seen as too expensive by one customer could be the lower than the value perceived by a similarly positioned company. A customer’s willingness-to-pay is key and optimizing prices for customers means they are more likely to pick up on products and services tailored to their interest.  
  • React to market changes faster. Knowing your base segments, target/stretch/floor pricing, and your ability to make changes and the possible risk allows quick reactions when there are changes in. 
  • Use customer behaviors to make informed decisions.  Historical data helps build the full picture of your customers and their stickiness and willingness to pay for more wins and greater opportunities.  

What if you could get price guidance for every deal, balancing the downside risk of losing the deal as well as capturing the upside potential to improve margin?  

This is possible. By using a calculated price guidance and optimization solution that learns from your historical pricing behaviors in the transactional data and calculates optimized prices to maximize margin and minimize the risk of losing customers during any sales negotiations.  

Deal price optimization framework: 

  1. Build AI/ML-based Segmentation 
  2. Add Business Rules based on your company’s expertise and experience 
  3. Optimize for discounts 
  4. Provide to Sales Teams 
  5. Sales increases wins 

Price optimization is the most effective way to drive tangible value for your organization. Using technology like deal price optimizer that combines human understanding, experience, and contextual insight with AI’s tireless processing power, decision-makers can leverage their data to act promptly and decisively. They can adapt to current circumstances as well as plan for strategic improvements.