If you are an emerging business looking to soar high in the competitive environment, the first basic thing you need to learn is how to set prices. B2B pricing involves setting prices of your goods and services in order to sell them to other businesses. Remember, business-to-business involves selling products to other business vendors, instead of directly selling to consumers.
Most B2B businesses who over-value their products, set extremely high prices whereas the others who under-value their services charge very little. These two extremes are considered as common pricing mistakes, which companies often make. If you are looking to develop a smart pricing strategy, avoid the pricing mistakes that we have listed down below:
1. Setting Prices and Forgetting about them
Most companies focus so much on their business development and marketing that they ignore how important the pricing strategy is. All of this must go hand-in-hand for your business to succeed. Don’t set prices like they will be constant for the rest of your business journey. They must be continually tested and evaluated along with the changes in your services.
2. You’re not Identifying the Value Metric
A value metric determines what you’re charging the product for and how you are charging it. You must realize the worth of each product and the value they offer to the customers, before setting up their prices. In order to use a value metric, businesses need to adjust the pricing according to the service the respective product brings. If you’re not doing it, you’re making a mistake.
3. You’re Providing too Many or too Few Pricing Options
It is always easier to keep the pricing packages simple so customers don’t get confused when selecting one. Many companies make the mistake of either providing too many or too few pricing plans/tiers, which makes their business purchases look very complicated. You can make sure all the information is transparent, simple and easy to understand.
4. You’re giving away Unnecessary Discounts
We’ve seen a number of vendors listed on a Chinese B2B Platform offering unnecessary discounts to buyers for the sake of customer satisfaction. This may get you more customers but in an extremely competitive B2B market, this might as well set a bad precedent for the future. This way customers will only make purchases when there is a discount and will keep expecting it.
5. Using the Pricing Strategy for ‘One-Size-Fits-All
A One-size-fits-all strategy is applied to products when they have the same sizes regardless of their quality, material and production investments required. By using this strategy, you’re allowing customers to pay more for less valued products and pay less for higher service products.
To overcome this, businesses must set adaptive pricing so they can price different sub-segments according to the value they offer. You can weigh the value of a product based on four points:
- Brand experience
- Technical capability
- Workflow productivity
Therefore, it is important that the value of a product must be considered before setting its price.