Longtime readers will know that we here at the PricingBrew Journal are huge advocates for putting the most accurate prices possible into the marketplace. Through our research, we’ve come to view developing the most accurate and granular pricing model their organization can possibly execute as being a B2B pricing function’s top priority and primary reason for being (or raison d’être in fancy talk).
That said, however, it’s important to recognize that there are a number of extremely powerful strategic pricing improvements that have little to do with the price-points themselves. In other words, there are systemic improvements that can have a massive impact on price realization and pricing outcomes…but without actually messing with the prices very much, if at all.
Here are four of the most impactful “non-price” pricing improvements that have produced significant benefits for leading B2B pricing teams:
1. Value Communication
All of the sales, marketing, and product messages that our prospective buyers are exposed to can have a significant influence on their value perceptions, purchasing preferences, and ultimately, the prices they are willing to pay. By working to ensure that our differential value is being communicated as effectively as possible in our sales and marketing efforts, we create more advantageous value perceptions that then lead to higher willingness-to-pay and price realization.
- Communicating Value Over Price
- The Fundamentals of Value-Based Pricing
- Leveraging Your Multidimensional Value
2. Negotiation Training
Our research shows that most salespeople have had little or no training specific to negotiation. At the same time, however, most of the professional buyers on the other side of the table receive copious, ongoing training in the use of dozens of highly-effective “concession extraction” strategies, tactics, and outright tricks. By taking steps to ensure that everyone involved in quoting and deal-making receives ongoing training specific to negotiation, we can close this extremely costly skills gap, protect our margins, and improve net price realization.
3. Targeting Refinement
We all know that financial and pricing performance can vary dramatically between different types of customers and deals. Unfortunately, when it comes to attracting and securing new business, sales and marketing will often cast a very broad net and just “take what they can get” or “take it as it comes” (a laissez-faire approach in fancy talk). But by helping sales and marketing focus on the prospects and deal-types with inherently better performance characteristics, we can improve pricing outcomes as a matter of course.
4. Sales Compensation
With sales compensation plans based solely on revenue production, margin erosion is virtually guaranteed as salespeople are incentivized to sacrifice the bottom-line in order to secure the top-line. As such, a revenue-based compensation plan can’t help but act as “wet blanket” or dampener on overall price realization. By working to include some measure of pricing performance or target price attainment in our sales compensation and incentive plans, we can remove the wet blanket and boost pricing outcomes across the board.
As you can see, with respect to these four strategic improvements, the price-points themselves are a bit tangential and even somewhat incidental in some cases. Yet, each of these improvements is capable of generating significant gains in overall pricing outcomes and performance.
To be clear, producing more accurate and more relevant price-points is definitely job number one for B2B pricing teams. But once that job is well underway, it seems that these types of strategic improvements should be considered for the next handful of jobs, yes? Yes!
Communicating Value Over Price
How do you know whether your value messaging is good, bad, weak, or strong? And how do you ensure that the value of your offerings is being communicated as effectively as it really could and should be?
Exposing the Secrets of Price Negotiation
How do you protect your margins when your sellers are so outmatched? How do you keep them from falling for every trick in the book? And what does your pricing team need to know to provide another layer of protection?
Managing Mix to Improve Pricing
Product and customer mix have an incredible amount of influence over every aspect of your performance. In this on-demand webinar, learn how to get proactive about "rigging" your mix to your advantage.
Revamping Sales Comp to Improve Pricing
In this on-demand webinar, you'll learn about the pros and cons of various approaches for infusing pricing performance into your sales compensation plan to reduce unnecessary discounting and boost profitability.
