PricingBrew

Insights & Tips

Already a subscriber? Login

Become a subscriber and unlock an information arsenal focused on making your pricing efforts more effective.

3 Things Rookie Pricers Ignore

Legendary Detroit baseball commentator Ernie Harwell once described a rookie player as having “experience no bigger than the lump in his throat as he begins fulfillment of his dream.”

Starting out in your pricing career might not be quite as exciting—or intimidating—as your first at-bat in the major leagues, but rookie pricers do have to deal with pressure to perform despite having very little experience.

And that combination of pressure and inexperience makes them very susceptible to rookie mistakes.

We’ve noticed that newbie pricing practitioners tend to make the same sorts of blunders: they frequently ignore critical pricing concepts. They take their eye off the ball, so to speak.

These folks with less experience tend to forget about three concepts in particular:

1. Price segmentation — In any B2B market, some customers are willing to pay a lot more for products than others are. Having an accurate segmentation model is crucial for extracting maximum value from B2B customers. The webinar The Fundamentals of Price Segmentation explores this concept in more depth and walks new pricers through the process of creating a segmentation model one step at a time.

2. Customer lifetime value — Unlike most B2C markets, most B2B markets are defined, that is, they have a limited number of potential customers. Those customers may buy very frequently, but there aren’t new customers coming into the market very often. That makes customer retention extremely important. The guide Avoiding Mistakes in Customer Profitability Management examines LTV and related ideas in detail and offers tips for avoiding common pitfalls.

3. Differential value — When customers evaluate prices, they do so in relation to their other options. Their perceived value of your offering as it compares to other products or services determines whether they think your price is too high, too low, or just right. So in order to set prices, you need to understand your differential value, and the tutorial Exposing Your Differential Value Step-by-Step walks you through the process of determining how customers view what you have to offer.

If rookie pricing practitioners can master these three concepts, they are well on their way to a successful career.

But of course, this is only a start. Pricing all-stars have to master a wide range of skills, some of which we explain in the webinar Crucial B2B Pricing Concepts. It looks at six fundamental ideas that every pricing pro needs to understand thoroughly. It’s a great place for new practitioners to start their education in the pricing discipline. And while we can’t guarantee that you won’t ever make any errors after watching, it can give your skills and confidence a boost that can help eliminate some of those all-too-common rookie mistakes.

Get Immediate Access To Everything In The PricingBrew Journal

Related Resources

  • How Customers Evaluate a Price

    Customers aren't as logical in understanding value and assessing a price as you might think. In this guide, Mark Dresdner exposes eight factors that play an important role when a potential customer evaluates your prices.

    View This Guide
  • Leveraging Price Testing

    What do you need to know about the state of price testing in B2B environments? Which methods are best? And more importantly, how can you leverage these powerful concepts in your situation?

    View This Webinar
  • How to Prevent Margin Meltdowns in the Field

    When your salespeople adopt better pricing and discounting habits, your strategies can become much more powerful than they were on paper. In this tutorial, learn seven real-world strategies and tactics for getting B2B salespeople to price and discount more effectively.

    View This Tutorial
  • Dealing with Price Exceptions

    For many teams, their exception-handling processes are a significant and ongoing source of frustration and inefficiency. So how should you go about improving these critical processes?

    View This Webinar