It’s not possible, but it is true. Even though a 1% price optimization can result in an 11% increase in profit, many companies admit that they don’t prioritize their pricing strategy.
Our guess? It could be more straightforward. It shouldn’t. Your company risks losing revenue and customer satisfaction by not setting the correct pricing.
The three most popular B2B pricing strategies are value-based, competitive, and cost-plus.
Pricing models, value metrics, and buyer personas are the foundation for pricing strategy.
In the pricing process for B2B, many things need to be corrected. These include surprise fees, low-priced tunnel vision, ignoring competitors, and the need for customer segmentation.
Common B2B Pricing Strategies
First, what is a pricing strategy, and how does it work? It’s the way you decide the price of your product/service.
Three pricing strategies are common in B2B sales.
Pricing is based on the value
Because it is the most difficult of the three, we’ll begin with it because it’s widely considered the best option when companies can implement it efficiently.
Value-based pricing refers to the actual value and perceived worth. This value depends on many factors, such as customer segment, industry reputation, and competitor pricing.
Take a look at these:
A man is about to purchase a new car. He is presented with two options when he arrives at the dealership.
Although a used sedan is a few years older, it shows some wear but is in excellent driving condition. It’s a great deal.
Next is a new convertible sports car. This car is more expensive than a down payment for a home but has the best features inside and outside.
Which car will he choose to drive?
Of course, it depends. It all depends on what he considers essential.
This is the basic foundation of value-based pricing.
Things get more complicated in practice. To implement a value-based pricing strategy, you must research your market and target audiences to determine your product’s actual and perceived values.
You would then use a data-driven approach to assign a price for your offerings. Even though you have data support, this strategy is often complex and subjective. Determining an exact price point based on value takes industry experience.
Competitive pricing removes customer value from the equation and focuses solely on the pricing of competitors in the market.
It sounds easy, but it’s not.