B2B Pricing White Paper

In response to the last post, I thought I would post this informative white paper on pricing from a B2B perspective, written by Nick Hague, the Director of B2B International Ltd. It provides a great foundation on how pricing works, gives and introduction to pricing research, and addresses some of the considerations pricers face in the B2B pricing environment:

"In the ever-changing business world of today, with increased globalization and low-cost manufacturing from Asia, competitive advantage is key. Competitive jostling is a never ending battle as continuous product innovations result in shifts in competitive advantage. Consequently the question most companies ask themselves is ‘How do we get more?’ This is one of the hardest questions to answer.

"The strategy of cost cutting, whilst intuitively making sense, is usually a road to ruin as some smarter competitor, often working from a new geography with a lower cost base, undercuts you. Very few companies can sustain the cost advantage for long. Equally, attempts to increase sales by any means such as ramping up the promotions (or cutting costs) or increasing the value added, takes considerable time. In fact, raising prices has to be seen as the easiest option to give more profit.

"Therefore the big question that needs answering is this: “if the price is increased, will sales volume decline and if it does, will it be more or less proportionately to the rise in price?”. No company wants to leave money on the table and so obtaining the optimum price has always been a key issue to marketers. However, asking customers to quantify the price they would be willing to pay for a product or service is one of the hardest questions for any researcher as the customer may not feel that they can answer such a question or if they can it may not represent their true actions if such a price was introduced to the market."

Read the full white paper "The problem with price".