Whether you just started your business or it has been established for a while now, it is never too soon or too late to think about your b2b pricing model. A b2b pricing model is a business to business strategy for pricing based on several factors. An efficient pricing model will increase revenue by maxing the amount charged for products and services, but will still out-perform your competitors. While this seems like an impossible, fine line to walk, that line exists for every business in every industry. Once the formula is found, it’s just a matter of plugging in the numbers. Optimizing your pricing model is the first step you can take to finding the formula that works best for your business.
The best part about optimizing your b2b pricing model is that you will see rewards almost immediately. It is a great way to pay off dividends quickly, without investing a lot of money and waiting months to see if it has proven successful. These tips are smart, practical ways to optimize your b2b model and guarantee improvements to revenue in a short amount of time.
Pricing is often an overlooked part of the overall strategy for a business. If you have set your prices when you first began your business, or even just a while ago, ask yourself-- what other part of my business do I not evaluate for months or even years on end? Hopefully the answer to that is nothing! A great step is just simply looking at and analyzing the prices that you set a while ago and begin to draft a plan to change them. At the very least, you will begin framing your thought processes around pricing.
It is important to remember, while you begin incorporating pricing into your business mindset, that pricing needs to work synergistically with your marketing efforts and product development. When these three elements of your business model are working together, it is a recipe for success. This may mean you will need to reevaluate all three! But do not be afraid of this daunting task, it may be easier than you think, and you will be set for success from the start.
You probably already know that buyer personas are key to your marketing strategy, but have you considered that they also may be key to your pricing model? Instead of simply assigning prices to your personas try developing completely new personas for each pricing tier. This allows you to think critically about who will purchase the product at different price levels. You can cross reference with your marketing personas, as there should be some level of integration between the two.
A pricing persona, unlike a marketing buyer persona will focus more on the financial motivations and limitations of the potential prospects. A multi-level persona system can help you carefully assess each prospect’s business and financial motivations for purchasing your product. It will also assess which problems your business can solve both with the product itself and the price of your product.
If you are afraid to experiment with your prices, then you are already accepting a loss in profits. You can never know for sure if your prices could be improved without actual experimentation. Experimenting, should be based on more than just a guess, however. Once you have developed a new strategy for pricing, you will need to take the risk of adjusting prices. Additionally, you will need to allocate adequate time to see if the experiment is a success.
The best way to test the performance of price changes is with A/B testing, which is something that digital marketers should be familiar with. A/B testing is when you test multiple strategies at once in order to see which one gives the most favorable outcome. This type of experimentation is beneficial because it will allow you to test what your customers are truly willing to pay for your product.
While discounts can be a great way to get new customers and to incentivize regular customers, it can be a dangerous practice. Customers become very accustomed to discounts, and if you decide to cut discounts then customers will feel misled. Instead of offering discounts for your services, ensure customers that the price is transparent, reasonable, and still a great deal! Features such as helpful customer support will make customers feel like they are getting a bang for their buck, and will keep them coming back year after year.
Competition in the B2B industry can be intense. Customers have a wide range of options, and if you price yourself out of the industry you will lose even the most loyal of customers. The only way to know if your prices are competitive is by keeping a close eye on the competition. Competitive pricing strategy is the process of basing your prices on the competition. However, it is important to take this strategy with a grain of salt. Do not undervalue yourself, your business may be offering value beyond your competitors.
When implementing this strategy, look at competitors that are offering a product that is the most similar to yours. Both in terms of level of service and value of the product itself. This will give you the best idea of where your customers may be looking as well.
There are many strategies you can potentially implement when developing or revising your current pricing strategy. But whichever strategy you choose it is essential to continue to optimize it, as the market shifts and changes and as customers come and go. A B2B pricing model should work for your businesses unique needs and value. At its core, optimizing a B2B pricing model means putting yourself in the customer's shoes and understanding the problem they are looking to solve and the true price they are willing to pay in order to solve that problem.