Pricing pains? More CFOs turn to software for better profits

Fast-growing 'optimization' products often can work, McKesson Medical-Surgical CFO Britt Vitalone learns from experience.

By , CFOworld |  Software

The PROS organization itself uses its own software --- not surprisingly --- and its own CFO, Charles H. Murphy, reports in an e-mail that he, too, benefits. The company's pricing strategies are employed "together with our quoting capabilities to deliver the right price for the right customer, combined with the right approval workflows that support our profitable growth strategies." (Says Reiner of his CFO of 13 years, Murphy has been "instrumental in ensuring PROS' long record of continuous profitability," working with the sales organization and both customers and prospects, "forging long-term, consultative relationships.")

Optimizing Its Own Pricing

The software can be expensive --- for external customers, anyway. Indeed, for the largest companies it can be in the range of $2 million or more. But PROS says that in its case, at least, charges, based on the customer's revenue under management, aren't assessed until customers meet critical implementation milestones and calculate the return on their investment.

Plus, of course, PROS considers the cost to its clients to be dwarfed when the profit result reflects McKinsey's 10%-or-so profit expectation for each 1% boost in pricing. And, says Reiner, "Payback is most times within the first year."

McKesson Medical-Surgical's Vitalone can't report quite that degree of value; payback will be "perhaps a bit longer in our case, as there is an implementation and ramp-up time that need to be factored in," he says. (While he won't discuss what the company pays to PROS, when the $2 million figure is cited he notes that "we did not invest near this level.")

Whatever the actual cost is, though, he adds, "suffice it to say I am pleased with the return for the investment."

Originally published on CFOworld |  Click here to read the original story.
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