Pricing is one of the most powerful levers available to retailers to make an impact on the P&L. Moving away from guesswork and cost+ strategies to automation and rules / ML-driven pricing can be transformative to any retailer who wants to create an immediate pricing impact on the P&L. 

However, deciding whether to build or buy pricing tech, evaluating different solution providers and then ultimately successfully integrating pricing tech in existing processes can be an expensive and time-intensive process if done poorly.

This blogpost is an ultimate guide to deciding if you need to purchase Retail Pricing Software, what you should look for in this process and then a Top 5 list of contenders for retail pricing software. 

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Why should you trust this guide?

I am the founder and CEO of Luca, the modern pricing engine for retailers. I’ve spent 100s of hours talking to retailers about pricing processes and about the software solutions they’ve tried. This is a compilation of all of our learnings from talking about pricing with retailers of every size.

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Do I need retail pricing software?

For most small retailers (<$5 million/ year in sales), home-grown processes and off-the-shelf solutions should suffice for making pricing decisions. At this scale, elasticities are hard to calculate and price A/B testing will likely be indecisive. 

The largest retailers (>$10 billion / year in sales) in the world such as Walmart and Amazon have in-built pricing teams with processes that are configured for their specific businesses. This works well for them because they are able to allocate large budgets to hire technical talent that are able to build these systems for them at scale.

Most mid-size retailers that fall in the vast middle of this range ($5 million to $10 billion / year in sales) should answer the following questions to get to the right answer for them for retail pricing software. If the answer to most of these questions is YES, then they likely need to start exploring purchasing software – 

Questionnaire to evaluate your need for retail price optimization software.

1. Do I have more than 500 SKUs?
2. Do my costs change frequently (2+ times a month)?
3. Do I have competitors who sell similar or the same products to my target audience?
4. Do I change prices more than 2 times a quarter?
5. Do I have a seasonal business (this means there are clear trends of sales in certain categories based on the time of year)?
6. Do I have a team or person that spends more than a cumulative 10 hours / month on pricing decisions?
7. Does it take a long period of time to approve pricing decisions because it needs to go through multiple layers of stakeholders?
8. Do we fail to understand the impact of our pricing decisions because we don’t have the time to measure them?
9. Do customers complain about our increasing prices (aka perceive us as having a poor price image)?
10. Do I have a long tail of low-sales products that I don’t have bandwidth to pay attention to?

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What features should I look for in retail pricing software?

Once you’ve concluded you need to purchase a retail pricing solution, here are the key features you need to evaluate the right retail pricing software for you.

1. Data Integrations capabilities

‍The first question you should ask your retail pricing software vendor is “Do you integrate with my <insert ERP> system?”. Alternatively, if you have a homegrown data system, the software provider needs to support custom integrations with that system through an API or through custom integrations.If you have a 3rd party provider such as Oracle or NetSuite, the provider needs to be able to integrate with that system.Surprisingly, this is the biggest failure point for retail pricing software providers. Therefore, ask upfront for a list of supported integrations or API documentation to ascertain that data integration will not be a failure point for your retail pricing software adoption.

2. Robust rules engine

One of the most important pieces of functionality in retail pricing software is a rules engine. This is counterintuitive for users who expect that “price optimization” will perform magic without any rules in place. However that is very often not the case. Price optimization algorithms need to be given a northstar to pursue. This can be a competitive position, a revenue or profit maximizing goal, or a margin target. In addition, the price optimization engine needs boundaries around your pricing rules – such as rounding rules, price increase/decrease boundaries, competitor constraints for KVIs and so forth. Price optimization layers on top of pricing rules, and is not intended to replace pricing rules altogether.

3. Competitive Intelligence 

Most retailers in competitive markets will supplement their pricing decisions with competitors’ price points. Having access to competitor data will allow them to do things such as set up category, brand or SKU-level rules for their prices against their competitors. It will also help them understand the health of their pricing strategy from a competitive perspective. Most retail pricing solutions will not do competitive intelligence, instead relying on rules or elasticities to make pricing decisions. If competitive data is important for your business, it is important to select retail pricing software that also supports competitive pricing.

4. Elasticity Modeling 

Next, you want a platform that calculates price elasticities at a SKU-level. To be able to do this effectively, the platform needs to be looking at your sales history and augment that with industry sales data. Here are the questions you should ask a company about elasticity modeling before you purchase the software - 

1. Do you estimate SKU-level or category-level elasticities?
2. If it is at a SKU-level, how do you make it work for SKUs with a low volume of sales?
3. How frequently are your elasticities refreshed?
4. Do you have industry-specific elasticity models? 

Price elasticity will form a foundational component of your pricing decisions. It is important to understand how these elasticities are calculated by this specific platform.

5. Customer Support

The worst software solutions will sell you a product and then disappear on you! However you can’t do retail pricing software without committed setup and strategy support to get you up and runningHere are the specific questions you should ask about customer support to prospective solution providers.

1. Once you integrate, will you help us set up our pricing strategy in your tool?
2. Do you have data science support office hours to help us understand your elasticities?
3. Will you tune your AI models based on our feedback?

This will give you a signal on whether the vendor is sticking you with a general-purpose solution or a custom model that works for your specific business.

6. Price Pushing and Manual overwrite capabilities

When the retail pricing software makes pricing decisions, it needs to push those pricing decisions back into your pricing system. For some companies, this is a “PIM” or Product Information Management software, and for others it might be some bespoke database with the pricing source of truth. Therefore you need to look for “price pushing” features, or API documentation for how prices will get to your system from the pricing system. This will be in the form of integrations or in the form of an API.Secondly, you also need the ability to undo price changes or manually overwrite the prices suggested by the software and push it to your system. This kind of configurability is important for smooth operations. 

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What should my timeline be for evaluating a pricing solution?

Typically, it will take 3 months to get up and running with an external pricing software. This has the following breakdown - 

1. 6 weeks of data integration
2. 2 weeks of strategy and dashboard setup
3. 4 weeks of tuning once the model is up and running

Note that this is an optimistic estimate for the best solution providers, and sometimes the larger / older companies can take up to 12 months to get customers up and running. You should take that into account when making your decisions.

Larger retailers will often run a pilot period before committing to a pricing solution. This can take an additional 2 to 3 months. It is usually possible to run a pilot without doing a full data integration, and simply via spreadsheets.

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Top Retail Pricing Software solutions

As of August 2024, these are the top retail pricing solutions on the market.

1. Luca

Luca is a modern pricing engine for retailers, founded by the ex-Uber pricing team. It is backed by Y Combinator and Menlo Ventures, and is a team of engineers and data scientists from some of the best retail pricing teams in the world.

‍Why did I pick Luca for this list?

1. Luca is a combination of modern, easy-to-use UX and a crazy powerful pricing engine under the hood powering insights and decisions. 
2. Pricing, Competitive Data tracking and Promotions are all under one roof
3. Ship crazy fast, with new features launching weekly. 

‍What are some of the cons of working with Luca?‍

A fast growing startup, with limited resources. 

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2. Revionics

Revionics is an American software company that develops lifecycle price optimization software for retailers. It is owned by Aptos and is a 22 year old company. It works mostly with large enterprises.

‍Why did I pick Revionics for this list?

‍Revionics is an OG player in the retail pricing space. They work with the largest grocery and speciality retailers in the world. They have an extremely configurable platform that can meet complex enterprise needs.

‍What are some of the cons of working with Revionics?

1. Large contract sizes, catered to larger companies
2. No competitive intelligence, so you need a different provider to scrape data
3. Customers complain of clunky UI that takes a long time to setup correctly. 

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3. dunnhumby 

Dunnhumby is a UK-based, Tesco-owned customer data science company that offers a multitude of retail tools, including pricing and promotions. Dunnhumby builds custom and complex pricing solutions for the largest retailers of the world such as Tesco.Why did I pick dunnhumby for this list?

• Dunnhumby have been working on the retail pricing problem space for over 3 decades, and are truly subject area experts
• Dunnhumby is a services-based company, which can offer consulting services in addition to product.

‍What are some of the cons of working with dunnhumby?

• Almost exclusively work with large enterprises, with 7 figure+ contract sizes
• No competitive intelligence, so you need a different provider to scrape data
• Limited feature updates, without paying for upgrades.

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4. Relex solutions

Relex Solutions provides a unified supply chain and retail planning platform that aligns and optimizes demand, merchandising, supply chain, operations, and production planning across the end-to-end value chain. Why did I pick Relex solutions for this list?

• Relex is a complete platform solution for those who need demand forecasting, inventory management in addition to pricing and promotional planning.

‍What are some of the cons of working with Relex?

• Relex is primarily an inventory management and forecasting company that also has a pricing module. 
• No competitive intelligence, so you need a different provider to scrape data

‍Book a call ‍

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5. Cleardemand 

Cleardemand is an AI-driven solution for managing and optimizing prices based on demand, competitor pricing, and consumer behavior. Why did I pick Cleardemand for this list?

• Cleardemand does holistic pricing and competitive intelligence in one platform
• Cleardemand works with some large grocery names in the US
• Cleardemand has some great features around measuring Price Perception

‍What are some of the cons of working with Cleardemand?

• It is unclear what technology Cleardemand uses to measure price elasticity and forecasting. They have published limited public information about this.

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