Blog, Pricing

Do You Really Have a Choice But to Adopt Strategic Pricing?

By Stephan Liozu
December 10, 2019

This year on the Vendavo blog, I highlighted many of the mega trends faced by organizations around the world. Read the business news every day and you see more retail companies disappearing, success stories of pricing champions, and a wave of strategic acquisitions never seen before. The world is changing and it is hard to keep up.

Strategic Pricing Adoption

I have spent most of my free time researching pricing and the adoption of the discipline in top 1000 firms. There is a stark difference in the level of adoption of pricing between B2C firms and B2B firms, as well as significant differences in regional adoption. I also researched the status of the pricing software management space and the need to grow faster and to go viral.

What is puzzling to me is the wide gap between digital trends and the adoption of pricing discipline and technologies in firms. Over 85% of companies embark on some sort of digital transformation but just 20% of companies have dedicated pricing team. Large investments in pricing are tough to get approved. I go back to some of the points I made in my early blog posts and I am asking myself the following question: do firms really have a choice but to adopt pricing as a key discipline to support their business model?

The answer is no. Leaders might still not understand what pricing is or consider the discipline a strategic one. I posit that the market will force them to move and, when they do so, it is going to be pressure time! Consider the following points:

  • As Amazon enters more and more of the B2B world, can industrial and B2B firms compete against their dynamic pricing engine?
  • As B2B marketplaces gain strengths in niche vertical markets, can B2B firms adjust their pricing to fast bidding and dynamic quotation requirements?
  • As the next generation of digitally-enabled B2B buyers enters the work force, can B2B firms continue to work with Excel and antiquated quoting tools?
  • As the B2C pricing is very transparent, can B2B firms continue failing to communicate transparently and simply about pricing and continue to ask their customer to “contact sales rep for pricing?”
  • As firms grow in international markets, can they manually manage the complexity of pricing guardrails, gray markets, parallel imports, and regional dynamics?
  • With growing threats of currency wars and unpredictable tariffs, can B2B firms continue to manually load pricing lists once or twice per year?

Wake Up Call

You get my point. The answer to all of these questions is NO. Of course, as a pricing function, we have to make it easier and simpler for firms to embark on their pricing journey and provide rightly-engineered tools to make fast decisions. We have some work to do there. Pricing technology needs to adapt to the era of agility, speed, and platform thinking. Only when this is achieved will we be able to integrate well into the sales enablement and business intelligence spaces.

This is a wake-up call for all top executives to stop thinking that pricing is optional and discretionary. Amazon is standing at your door. It is also a wake-up call for the pricing function to accelerate and to focus on how to integrate into the high speed train of digital. Find a way to get your C-suite to read this post. Top executives need to realize that there is no digital future without digital pricing and pricing systems investments. Ask them to join the pricing revolution!

Organizations are slow to mature their pricing function and that means opportunity for you – check out the Pricing’s Hidden Opportunity infographic. And, if you’re considering a pricing solution in 2020, download our Pricing Software Buyers’ Kit for everything you need to understand the market, ask the right questions and evaluate vendors.

  • Amazon , B2B , digital transformation , pricing

    Stephan Liozu

    Stephan M. Liozu, Ph.D. is the Chief Value Officer of Thales Group and is the Founder of Value Innoruption Advisors, a consulting boutique specializing in pricing, value, and change management. Stephan holds a Ph.D. in Management from Case Western Reserve University where he researched the topic of transformational change and leadership in pricing.