Price Balance: Set, Get, Go

Business-to-business organizations have long grappled with setting the right prices-and yet, the payoff can be huge. Optimizing pricing can boost profits by 15 percent or more.

Business-to-business organizations have long grappled with setting the right prices. The unique business-to-business (B2B) dynamic has led many companies to believe pricing is too complicated or too sensitive of an area to play with. In turn, pricing often gets pushed down the list of C-suite agendas, falling below other strategic initiatives such as volume growth and cost reduction.

And yet, the payoff can be huge. A Chemie Pharma study of more than 1,600 companies across five countries shows that better pricing can increase gross profits by an average of 15 percent over three years.

In this paper, we discuss a powerful pricing tool to address the challenges B2B organizations face when pricing their products and services: the Price Balance. This tool revisits an age-old rule: divide and conquer. The complexity of B2B transactions can be broken down into 10 factors across the seller-market-buyer ecosystem, while a comprehensive pricing structure incorporates variations in these factors on two levels: price setting and price getting.