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  • Writer's pictureMMGMC

B2B Pricing Optimization

  • Short term opportunities exist. Many companies focus on longer term strategic pricing, with sales force effectiveness, new product development, customer development, and capex. Analytical pricing opportunities exist in parallel with strategic options.

  • Industry is not a good indicator of opportunity. Specific company factors are better predictors of pricing opportunities than industry. Company specifics such as the structure of salesforce, geographic reach, product range, internal delegation processes, and compensation models are more accurate indicators.

  • Complexity breeds opportunity. Highly complex pricing structures indicate opportunity for pricing analytics. Generally, sales, marketing, product management, and pricing teams lack the tools and resources to manage pricing across highly fragmented product lines, customers, geographies, sales structures, and data systems.

  • Data is critical to pricing success. While many companies have valuable tools, like a sales effectiveness system, rarely is data combined to create a complete picture of pricing opportunity. Sales data is usually available but pricing data is rarely aggregated in a way to provide an actionable view of pricing.

  • Customer reactions are often over-played. Adverse customer reactions are often raised as a reason to avoid more direct and aggressive pricing approaches. However, an analytical approach to pricing will either highlight the true value created for specific customers (and allow sales teams to promote this value) or create transparency to the true cost of cautious pricing execution.

  • Pricing gains do not necessarily reduce demand. Surgical pricing actions based on data and analytics can deliver revenue growth without stalling top-line demand.

  • Analytical pricing can be delivered quickly. Tactical pricing changes can be delivered quickly if the business is aligned for success. And, results deliver long term value when business process changes are sustained.

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