price optimization

Know How your Customers Respond To Price

Trying to figure out what to charge for each B2B order can be a risky guessing game — even for the most experienced B2B salesperson. On one hand, you want to ensure you get the most revenue and margin out of each order. On the other hand, you want to be sure you can win the sale. It’s a constant struggle to not price too low and too high.

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Predict Accurate P&L Results

Many companies take a common but risky approach to running their business – they make critical pricing decisions in the belief that it will have a positive impact on performance, but without any hard evidence. In effect, they’re running a big experiment on their revenues and profits each time they set a price, and don’t really know the outcome until the end of the month or quarter. But by then it’s usually too late.

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Manage Cost Inflation

No matter how large or small your business is, material cost inflation can put the squeeze on you. And when it comes to raising prices, it’s often the last resort. Chances are good that your sales people hate the idea and your customers aren’t very fond of it either. After all, when you’re dealing with falling margins, the prospect of losing customers to a price increase just adds to the pain. But without an increase, your business will undoubtedly suffer.

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Reduce Over-Discounting

B2B sales is practically synonymous with discounted prices. Whether you’re talking about negotiated deals, levels and columns in a price matrix, or a blend of both, discounting is the way business gets done. And for good reason — customers value your products differently depending on a wide range of factors.

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Optimize Your Price List or Matrix

Price matrices have always been a convenient way for sales teams to quote prices, but managing them can quickly become an overwhelming task. The huge volume of data, complex relationships and constantly changing costs certainly don’t help. As a result, it’s easy for the focus to shift away from the quality and accuracy of the price points and on to coping mechanisms just to manage the data and processes.

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Price Configurable Products

How do you figure out how to price a product you’ve never sold before and may never sell again? How do you determine the optimal price for a product that’s built-to-order or uniquely configured? For many companies, their offerings are anything but standard — they’re built or configured to satisfy a customer’s unique specifications. And given all of the variables involved, the configured combinations that are possible can easily number in the thousands, if not millions.

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