B2B e-commerce pricing: How digital is transforming wholesale distribution
The average B2B distributor is losing up to 5.2% of profit annually due to misaligned pricing. Discover optimized B2B e-commerce pricing.
B2B pricing strategies are more challenging than ever today. Pricing triggers, the external events that necessitate a price response, are occurring more frequently and with unpredictable intensity.
As economies have reopened in recent months, the biggest trigger has been inflated prices on everything from lumber to patio furniture.
This is a real dilemma for B2B leaders in nearly every industry.
“By the time the decision is taken to increase prices, manually change the price lists, matrices, and customer agreements, brief the sales reps and inform customers, the market has already changed again,” says Zilliant SVP of Products and Science Pete Eppele.
B2B pricing strategies: Why time is money
How can B2B companies combat inflation from a pricing perspective?
The common thread for any successful dynamic pricing strategy is the ability to move quickly, with intelligence. Too many B2B companies still manage pricing and other commercial decisions manually, relying on spreadsheets and disconnected, legacy systems.
The consequences of a slow, non-data-driven price change process are stark. Often, it can take up to three to four months for manual price increases to be put into market. As author and pricing evangelist Stephan Liozu remarked recently on the B2B Reimagined podcast: “90 days in an inflationary period is deadly.”
4 pricing strategies for B2B companies
A heavy-handed approach of raising prices across all customers and products will put sales at risk. And relying on traditional manual pricing tools will make it hard to execute a rapid, effective pricing strategy.
With the need for speed in mind, there are four pricing methods B2B companies can adopt during an inflationary period. All require evaluating your current capacities for fast response.
- Raising prices
- Adjusting discounts
- Product allocation
- Sales incentives
How to respond to B2B pricing triggers in real-time
Speed and flexibility are paramount for businesses today. Getting the upper hand requires real-time, highly relevant B2B pricing and sales guidance.
Surgical, speedy pricing adjustments
If you’re the market leader, a visible price increase during times of inflation is preferable. As the leader, not only is there less risk in this move, but the other competitors in the market are likely looking to the leader to provide air cover.
Your price increase must be surgical and scientifically-derived. Gut feelings won’t cut it.
If you’re not the market leader, and the leader has yet to increase its prices, it’s time to get creative by dialing back variable discounts or increasing rebate thresholds. This invisible price increase allows you to functionally raise price without taking a public increase.
B2B sales: Allocation and sales incentives
Many industries are dealing with low supply after post-reopening demand surges. If you’re one of these, putting products on allocation is a smart move. However, you must be judicious in deciding which customers are subject to allocation and where to set the optimal price thresholds.
Then there are your sales reps. We all know money talks for B2B sellers. The best way to change their behavior to match your crisis response strategy is with a financial carrot.
By incentivizing price increases adequately, you’re more likely to be successful in getting your sales team to adopt price increases. Operationalizing these incentives effectively requires a closed-loop reporting system.
B2B companies that adopt modern price optimization, price management and deal management technologies have discovered that it’s possible to enact strategies such as these quickly and precisely, at scale.