PricingBrew

Insights & Tips

Already a subscriber? Login

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

Why Aren’t More Companies Measuring Price Elasticity?

Being able to know what’s going to happen before you change prices would be an incredibly powerful insight to have, wouldn’t it? That kind of insight could let you model potential customer reactions to new prices and even understand what will happen to revenue and margin.

Being able to measure price elasticity is what it takes to give you those kind of insights. And while it’s obviously a very powerful concept and tool, it’s just not very broadly utilized by business-to-business companies.

We tasked our research team to better understand what’s holding companies back from taking advantage of this pricing capability. Through their discussions with pricing teams in the trenches, they uncovered 3 key reasons:

  1. The daily grind and constant firefighting tends to hold pricing teams back from understanding the concept and capabilities of price elasticity. If there’s not an existing initiative in place or a reason to take action because competitors are doing it, it’s difficult to break free from existing projects and start measuring and utilizing price elasticity.
  2. The traditional methods for measuring elasticity don’t work in a B2B environment. Few companies have good data around the deals that their sales teams quote and the win/loss outcomes. And in B2B, doing things like price testing are often operationally challenging, if not impossible. So, instead of finding a way to measure price elasticity for their business, many just decide it’s a bridge too far.
  3. Conflicting messages from pricing experts on B2B price elasticity give people pause. Some say that it doesn’t exist. Others say that it’s just different. But we know price elasticity exists in B2B–we all see it every day. Different prices will result in different volumes and different customers will have different price responses. Nevertheless, those conflicting messages can provide an excuse to stick with the status quo.

But the truth is, price elasticity is too powerful of a tool to let these reasons hold you back. Companies are using it to drive better pricing outcomes and you can too. If you’re ready to get going—or if you just want to learn more about how to use price elasticity—check out the training session replay of Business-to-Business Price Elasticity.

 

 

Get Immediate Access To Everything In The PricingBrew Journal

Related Resources

  • Business-to-Business Price Elasticity

    In this recorded training session, we explain the fundamentals of price elasticity in straightforward terms, explore the various principles involved, and provides valuable tips and insights to help you get started toward leveraging this most powerful measure in B2B pricing.

    View This Webinar
  • Delivering Data to Decision Makers

    Providing data to decision-makers is a core responsibility for most pricing teams. But getting it right is a significant challenge. In this on-demand session, learn how leading teams are making their efforts in this area more effective.

    View This Webinar
  • How to Avoid Sales Compensation Gotchas

    While no variable comp approach is ever perfect, you stand a much better chance when you minimize the unintended consequences. This guide exposes the problems with various schemes and explores potential solutions.

    View This Guide
  • The B2B Pricing Blueprint

    In this webinar, we'll explore strategic insights and lessons learned from experienced professionals to build...or rebuild...highly effective B2B pricing functions based on today's best practices.

    View This Webinar