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The Most Underrated B2B Pricing Initiatives

The harsh reality is that most businesses of any size will have a plethora of non-trivial pricing capability gaps. As such, most businesses will be ‘target rich environments’ for strategic pricing initiatives aimed at closing these gaps.

Amidst this abundance of opportunity, however, it’s very tempting to prioritize the types of initiatives that seem to be popular and garnering a lot of attention in business media and analyst circles.

But of course, the effectiveness of a pricing initiative isn’t always proportional to its visibility, popularity, or hype. Quite the contrary, some of the most impactful strategic pricing initiatives are decidedly ‘unsexy’ and somewhat mundane, flying under the radar to drive significant improvements in performance and results.

This dichotomy between perceived and real value highlights a key challenge for B2B pricing practitioners: identifying and prioritizing initiatives that, while perhaps lacking in immediate glamour and hype, offer substantial benefits in the long run.

Here are some of the most underrated B2B pricing initiatives we’ve identified:

  • Robust Price Segmentation — The better we understand the conditions under which willingness-to-pay differs across our marketplace, the better we’ll be at aligning our prices appropriately to maximize revenue and profit. A robust price segmentation model is what allows us to operationalize our understandings and execute to the various differences in willingness-to-pay. While being somewhat esoteric and not very glamorous, initiatives to develop or improve a price segmentation model are always foundational and incredibly impactful.
  • Improved Value Communication — Today’s buyers are doing much more research on their own, through various marketing materials and sales tools—i.e. websites, email sequences, webinars, recorded demos, data sheets, press announcements, use cases, whitepapers, etc. However, the messaging in these materials is often so loaded with generic platitudes and clichés that it fails to deliver a credible and compelling differential value case. By working with others to improve the messaging going into the marketplace, pricing groups can enhance competitive differentiation and reduce pricing pressure.
  • Pricing Intelligence Gathering — Real pricing intelligence is about so much more than competitors’ price-points and discount levels. After all, the largest margin meltdowns tend to occur when companies fail to anticipate meaningful changes in supply and demand dynamics. As such, pricing groups that identify, monitor, and analyze on an ongoing basis, even just a small set of highly-predictive upstream and downstream signals can help their companies to avoid getting blindsided, while taking maximum advantage of the anticipated changes over the coming days, weeks, or months. It’s not sexy, but it’s extremely powerful.
  • Negotiation Training — Effective negotiation skills are crucial for closing deals, optimizing value exchange, protecting contribution margins, and building healthy, long-term relationships with customers. Yet, our research has shown that while the majority of professional buyers receive formal negotiation training on a regular basis, most people on the selling side of the table have never received any sort of training specific to negotiation. By working to provide negotiation-specific training to everyone involved in making deals, pricing teams can correct this costly power imbalance that acts as a ‘dampener’ on almost every aspect of performance.

The bottom line is that the most popular or most “talked about” pricing initiatives often come wrapped in a great deal of hype and may not be the best fit for your company’s specific situation and needs. While the allure of cutting-edge technologies or trendy methodologies can certainly be enticing, it is essential to evaluate initiatives with a critical eye.

B2B pricing practitioners must rigorously and objectively assess their capability gaps to prioritize the strategic initiatives that will deliver the most value. After all, the path to pricing excellence in B2B is not paved with the flashiest or most popular initiatives, but with the most effective initiatives.

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