Playing every hand better in the pricing game

Are you ready for the new era in B2B pricing, incorporating the effects of digital channels and sophisticated procurement teams?

With the influence of digital channels and more sophisticated procurement teams, pricing in B2B markets is more dynamic than ever.

To improve revenues and margins in this fast-changing environment, companies are looking to improve their pricing capabilities by combining advanced analytics with marketing and sales expertise.

In many business-to-business sectors, margins are under pressure as more sophisticated procurement teams search for cost savings from a growing array of high-quality suppliers, including some in emerging markets. In this more competitive environment, sales teams may be quicker to lower prices–especially if they know too little about competitors’ prices or how much the customer is willing to pay.

In pricing, knowledge is power. Central pricing teams need to know enough to set the right limits on discounts for each geography and customer segment, for example. They also need the capacity and authority to prevent sales teams in the field from lowering prices too far. Pricing speed is also increasingly important as online sales channels and instant quotes become table stakes in many B2B marketplaces. More buyers expect to be able to compare a wide range of prices and alternative products across vendors at any time.

Indeed, we believe half of B2B sales will be made in digital channels by 2018. In this increasingly digital marketplace, more customers are willing to accept or even require dynamic pricing, just as they do when buying airline tickets, books, and Uber rides.

To improve revenues and margins in this fast-changing environment, some companies are improving their pricing capabilities by combining advanced analytics with marketing and sales expertise. They start by improving pricing transparency. With deeper knowledge of historical and competitive prices, sales teams understand more about where they’re discounting and where they have to discount—and make those choices consciously, in some cases walking away from deals that won’t be profitable.

As sales teams gain fact-based, real-time insights about pricing performance across customers, products, and markets, they learn where to draw the line on prices for each product in each negotiation, depending on goals that may range from maximizing profit to claiming beachheads in new industries. They can offer optimal prices instantly in digital channels to compete in a game that is moving online. And they learn how to tweak offers to win more business without lowering prices, for example, by offering better terms and conditions, just-in-time delivery, or easy returns.

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