4 Do’s and Don’ts of Successful Pricing Strategies


Modern commerce is a whole new race. And it’s going to get a lot harder from here on out with uncoordinated, manual processes that leave money on the table and lead to lost profits. Further, the compounding effects of diminishing profits inhibit your ability to re-invest in innovation that differentiates your products. Smart competitors today are moving past manual processes, best guesses and layers of approvals that contribute to ineffective pricing and delay quoting. When 53% of the buying decision is based on the sales experience, businesses can’t afford pricing processes that are doing more harm than good. So, what’s the key to a winning pricing strategy in the digital age? Power up with AI.

If you’re ready to drive pricing performance, here are a few tips:

DON’T Succumb to Pricing Pressure. DO Learn What Drives Variation in Willingness-to-Pay.

According to Simon-Kucher & Partners, 82% of businesses complain of increasing price pressure. This is due to stronger competition with low-cost providers, customers’ greater negotiating power and a higher level of price transparency due to increasing digitalization. But rather than succumb to pricing pressure, it’s important to understand what types of customers and buying conditions drive different perceptions of value in your product set. When you understand this, you can leverage price optimization strategies to ensure you have the market-rational price for every interaction. Fighting the traditions of over-discounting and gut instinct in this way can help you recover 100-300 basis points in margin.

DON’T Just Set It and Forget It. DO Continually Refine Price Recommendations.

According to a Hanover Research study, 54% of vendors say that price and competition are the reason they lose deals. Digitization has increased price transparency across both B2C and B2B markets, making it harder than ever to maintain competitive pricing. With the volume of information that you need to account for in your pricing accelerating so rapidly, it’s virtually impossible to make accurate and timely adjustments with manual processes. The only way to do this is with automation and machine learning, so that every price recommendation reflects the latest market and sales information.

DON’T Use Traditional Manual Pricing Methods. DO Deliver Pre-Approved Prices to Partners and Sales.

Traditional sales cycles rack up a large portion of time just trying to get approvals. But businesses lose sales when it takes too long to return quotes. A vendor that is slow to quote may just miss the race altogether. That was the case for a large enterprise technology company, whose processes were so complicated, confusing and slow that many partners were passing on quoting their products altogether. Furthermore, a deep-dive review of their pricing showed there was a lot more variance in realized pricing than they anticipated, along with many unprofitable deals. Once this company implemented data-driven pricing, with auto-approval of routine deals, they accelerated quote turnaround time, which resulted in 12,000 new partners, a 111% increase in quotes, $1 billion in incremental revenue and a 200 basis point margin improvement.

DON’T Sacrifice Margins With Reactive Pricing. DO Gain a Competitive Advantage Through AI.

Weak pricing strategies sabotage profitability. In fact, a study by Simon-Kucher & Partners found that the estimated cost of price weakness is 70 basis points. Rather than reactive, knee-jerk pricing that can lead to over-discounting, smarter pricing enables businesses to remove the guesswork and understand their true revenue and growth potential. By optimizing pricing with the power of AI, businesses are empowered to gain competitive advantage by maximizing their profit potential.

Accelerate Your Sales Experienced With Optimized Pricing

Learn how to leverage AI to optimize your pricing strategy for every unique sales situation and move in sync with changing buyer behavior and market conditions.

Are you ready?

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About the Author

Valerie Howard

Valerie Howard, Solution Strategy Director at PROS, manages the go-to-market strategy for the PROS pricing solution portfolio. As a former pricing leader and PROS user, she has firsthand experience in the transformative benefits and competitive advantages that can be realized through leveraging AI for pricing. Valerie earned an MBA from the McCombs School of Business at The University of Texas and a B.S. in Electrical Engineering through a scholarship at the Cooper Union for the Advancement of Science and Art.

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