Businesses today are feeling the squeeze on their margins. The available market in many industries isn’t expanding, leaving companies to fight over share. In fact, 78% of sales teams are reporting that their quotas have increased, with only 24% being very confident they can achieve them. At the same time, procurement departments have far more access to information to easily shop the competition. It’s easy to feel out of control. But there’s actually a lot you can control—and it begins by taking a good hard look at your price optimization and quoting capabilities. So where do you start? How do you even know if you’re on the right track?
A recent PricingBrew research report identified 10 areas where price optimization best practices have been redefined, setting new benchmarks for pricing excellence in B2B. It’s a great place to start to see where you stand.
10 Price Optimization Best Practices
1. Improvement focus
Rather than assuming that prices are accurate and that the problem lies with the approval processes, focus on the quality of your price points. In other words, have you laid the foundation to consistently deliver the right price, or is your hyper focus on efficiency just going to drive through more bad prices faster?
2. Price segmentation
Real and robust price segmentation is the key to determining the effectiveness of nearly every other pricing-related activity. The greater the granularity in segments, the greater your pricing power.
3. Market response
Are you putting prices into the market and hoping for the best? Here’s a better way: measure price response and use it to set better prices that are less risky.
4. Pricing technology
Smart technologies and dynamic pricing software can do things like analyze data and recommend optimal actions faster and more accurately than humans can every hope to.
5. Sales team guidance
Instead of expecting the sales team to analyze data and know what prices and discounts are appropriate, it makes a lot more sense to give them the answers they need. Leading companies are using the power of AI to provide this pricing guidance—and achieving game-changing results.
6. Sales team metrics
Don’t just measure and incentivize your team based on revenue. Also measure them on pricing and discounting performance and include “price attainment” metrics into your incentive compensation plans.
7. Pricing governance
Centralized control over all pricing decisions can be painful, and it can work against you. A better way is to build centers of excellence around pricing, which provides oversight and promotes cross-functional collaboration.
8. Depth of coverage
Deal-level decisions are important, but you can also enhance your price optimization capabilities in the early stages of product development to control pricing decisions with the greatest influence on margins ahead of the transaction, and much further upstream.
9. Breadth of coverage
Price optimization done right is much more than finding the right price and discount; it's also about developing an analytical and data-driven decision-making capability.
10. Innovation & change
The worst thing business can do today is cling to the status quo and resist change. It’s important to stay ahead by embracing innovation and the change that comes with it.
How to Optimize Your Pricing for Modern B2B Selling
From PricingBrew’s research report, we have learned 10 factors about B2B pricing that will change the way you build and deliver winning price quotes. Many traditional strategies for determining the best prices are no longer helping your sales team beat the competition. The next step is to adopt the necessary tools for adapting to modern B2B selling and eCommerce.
PROS Guidance price optimization software is designed to reduce the sales cycle time by 16% and increase win rates. By leveraging AI, PROS pricing software identifies revenue leaks and allows your sales team to quickly configure an optimal pricing strategy to recover the potential. With our pricing software, you may expect to achieve 100-300 basis points in profit margin improvement.
Customers expect rapid responses to their requests, which means your sales team does not have time to spend several days putting together price quotes. Consider how machine learning and AI can be used to recommend an optimal pricing strategy with science-based and pre-approved price segmentation.
About the AuthorMore Content by Valerie Howard