Earlier this year, Ibbaka surveyed sales leaders, product leaders, pricing experts and C-suite executives on the challenges companies experience in B2B pricing. There were almost 130 responses to this survey and as is our practice we complemented this with interviews and online research. Responses came from a wide range of industries but were concentrated in B2B software (SaaS and Enterprise) and healthcare. One of our interviews was with B2B value-based pricing thought leader Tom Nagle.
We took this data and ran it through our internal data analysis and segmentation platform to look for patterns and data clusters. We found that the pricing challenges fell into three main clusters. We think that these will resonate with those familiar with how B2B pricing actually gets done at most companies.
Ad hoc pricing: prices are set arbitrarily without truly understanding customer value creation, creating a fear of leaving money on the table
Inadequate execution: a relatively structured approach to price setting but inadequate execution resulting in discounting and loss of pricing power
Complex pricing: the complexity of product/service offer and pricing, combined with a complex buying process resulting in customer pushback and inevitable discounting
For each cluster, we provide insights into the underlying data and a set of recommendations on what to do if you find yourself caught in the pattern (perhaps we should call these anti-patterns).
About 25% of the respondents were in B2B Software, 11% in Health care Pharmaceuticals and Biotech, and the rest widely spread across other industries including Business Services, Wholesale and Distribution and Financial Services. Company size was distribution was bimodal with most respondents being either small (under $10 million in revenue or large, more than $1 billion (with more than 12% of respondents having revenues of more than $10 billion.
You can download the complete report here.
To get insight into your own pricing, check out our Self Assessment.