Hey everyone, Over the past few months, I’ve been working on designing operational scenarios for pricing systems, drawing insights from Aquarela’s practical project experiences in the industry, significant client interactions, and contributions to conferences. With a special focus on strategic pricing management in the Brazilian context, this article compiles my observations and outlines the trends I anticipate for the upcoming year, 2024. Questions or suggestions that enhance the discussion on this topic are always welcome!

Formation of Pricing Teams

A notable change is the increasing formation of specialized Pricing teams within the context of Revenue Management, especially in sectors with intense competition. There seems to be a strong correlation between a sector’s competitiveness and the demand for more robust pricing processes. 

While the complexity of pricing strategies is prompting companies of all sizes to recognize the importance of dedicated experts, the trend is not towards large teams. On the contrary, efficiency will be the key, with lean pricing teams supported by Pricing Administration Tools (PATs). I’ll soon delve deeper into this topic, focusing on tools crucial for streamlining processes and managing prices amid numerous constraints, enabling small teams to work quickly on parameterization and model testing.

There is a continuous demand for professionals specialized in pricing with high analytical capacity. In other words, for these professionals, there is no risk of unemployment. On the other hand, achieving a high professional level in this area requires the development of ‘cognitive jiu-jitsu’ skills to deal with the pressures from finance, sales, marketing, and logistics. A key aspect of the pricing manager’s profile is the high ability to communicate efficiently and balance the divergent needs of these sectors.

Tax Simplification – Brazilian Context 

Tax reform is a crucial variable to consider. Despite being a medium to long-term change, it brings a positive perspective to pricing strategies, especially in eliminating hours spent on tax calculations. This allows pricing tools and models to focus resources on more strategic aspects such as customer perceived value (value-based pricing strategies), positioning, market/competitiveness studies (pricing benchmarking) and price recommendation systems.

With tax reform, a reduction in distortions is also expected, providing a more equitable environment for companies to compete. This allows pricing teams to act with greater clarity in establishing pricing strategies.

Digitization of the Economy and Microservices Technologies

The digitization of the economy will continue to drive the digitization of prices, opening opportunities for price dynamism, as already seen in airlines, hospitality platforms, e-commerce, and logistics companies (What is Dynamic Pricing?). This means that more flexible and adaptable strategies will be essential to keep up with rapid changes in consumer behavior and the market environment.

Over time, in various interactions with business teams, I’ve noticed a growing interest and understanding among non-technical teams about the opportunities of microservices systems as aggregators of external data sources for pricing analysis. 

An interesting observation is that, despite the rising digitization, large ERP companies still face challenges and show little interest in creating integrated pricing solutions in their transactional applications due to the highly personalized and analytical nature of the pricing process. In other words, analytical layers for price study, analysis, and recommendation are expected, in the medium and long term, to be external to transactional systems such as ERP, CRM, and others.

Pricing Analytics

When it comes to personalization and/or customization, we enter the realm of competition analysis tied to machine learning algorithms and big data analysis to examine real-time market data. This dynamic approach allows companies to adjust their prices considering factors such as consumer demand, competitor behavior, and economic conditions.

Furthermore, personalizing prices based on specific customer data has become a significant trend. Companies are exploring pricing models that take into account consumer profiles, purchase history, and individual preferences. This not only enables a more precise pricing strategy but also creates opportunities for loyalty strategies and personalized experiences, contributing to a stronger relationship between the brand and the customer. It reflects a shift towards more dynamic, data-driven, and customer-oriented strategies.

Considering that more complex pricing models will use specific pricing systems, there will also be improvements in the application of specific Analytics methodologies (DCM methodology) for testing models to measure the behavior of tools in various pricing scenarios amid changes in negotiation behavior. However, companies at this level of maturity will remain limited, less than 2%. There is a trend, or at least greater acceptance, in the creation of pricing processes with federated databases (I will write more about this soon), allowing the expansion of models organically.

With the evolution of cloud computing and the acceleration of tool development in the Data Analytics universe, we can expect a year with new sector-specific cases being introduced to the market by technology-based companies. In the case of Aquarela, the most recent process was the creation of trading robots in the energy sector, capable of handling dozens of variables to find the best energy price positioning (Auren Develops Intelligence Project in partnership with Aquarela with 68% accuracy – Portuguese Article).

Conclusions – Trends in Pricing for 2024 from the Perspective of Aquarela Analytics

In summary, pricing trends for 2024 point to the formation of specialized and efficient teams, emphasizing the importance of technologies such as PAT systems. Tax reform offers a positive perspective, simplifying the tax environment and allowing a strategic focus on aspects such as customer-perceived value. 

The digitization of the economy drives dynamic pricing, requiring flexible strategies to adapt to changes in consumer behavior. The increasing application of specific analytics methodologies highlights the growing maturity in this field, with expectations of new sector-specific cases driven by technological development.

Large ERP companies will continue to focus on their transactional systems (core business), without providing relevant pricing options to the market, mainly due to the high level of customization required by a strategic pricing management tool. As a result, pricing solutions will continue to be developed and structured as external layers to transactional systems (CRM, MRPs, and ERPs).

What is Aquarela Advanced Analytics?

Aquarela Analytics is the winner of the CNI Innovation Award in Brazil and a national reference in the application of corporate Artificial Intelligence in the industry and large companies. Through the Vorteris platform and the DCM methodology, it serves important clients such as Embraer (aerospace), Scania, Mercedes-Benz, Randon Group (automotive), SolarBR Coca-Cola (food retail), Hospital das Clínicas (healthcare), NTS-Brasil (oil and gas), Auren,SPIC Brasil (energy), Telefônica Vivo (telecommunications), among others.

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