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Expert Pricing + Profitability Predictions For 2021

Vendavo< Vendavo January 14, 2021

After struggling through a year that deserves to be thrown into that proverbial dustbin of history, business leaders everywhere are hoping for a brighter and more predictable 2021.  

With that in mind, we reached out to our resident growth, pricing, and profitability experts here at Vendavo to offer their own predictions on what may lie ahead in the year to come.

Mitchell D. Lee, Director, Product Marketing:

Business leaders will be looking for ever-improving agility in their commercial processes – market disruption will be taken “as read” and no one will forecast periods of stability.  Offerings will have increasingly shorter life-cycles, forcing more granular measurement of specific performance across, products, customers, selling channels and business unites.  The data from these observations will drive faster, more effective, and more profitable actions in the market for those that lead.

David Anderson, Business Consultant:

I’m looking for anti-globalization trends to continue to some degree and see medium term government anti-trust pressure to break up businesses.  Global businesses will need to tool-up for responsiveness to changing corp structures & trade policy, and prepare for economic recovery from COVID that could generate currency disruptions as different regions recover at different rates.  There will be lots of pricing work to be done!

Robert Irwin, Vice President, Business Consulting:

This will be the year that the adage ‘B2B buyers want a B2C experience’ finally finds a practical footing, rather than being a theoretical toehold, in day-to-day sales. The continued enforced stay at home sales environment has proven to organizations that it is both possible and at times more effective to conduct commerce online. Customers are clearly demanding the convenience and the market participants who offer ease of doing business will win the day. Order taking has long been an eCommerce activity. Next up: Digital Negotiation. 

2021 will continue to be a year of Conspiracy theories: the flat earth movement, man has never been to the moon and Denver Airport is a Hub for the Illuminati (just a convenient train ride away from Vendavo’s HQ offices).  2021 will also be the year that we finally bust one long-standing conspiracy theory that: “Sales gut feel instincts are far better at judging pricing efficacy than techniques using data, data science, and data driven modelling.”

Ben Blaney, Vice President of Pre-Sales:

Fracture of the tech world because of geopolitical issues between East and West will lead to both threats and opportunities for chip makers, telcos and infrastucture firms.

Amazon’s dominance will give headaches to all kind of sellers (both manufacturers and distributors) as to how their total channel strategy should evolve.  They will all over-weight the need for endless finessing, and under-weight the need to take action quickly. 

Distributors will be squeezed by manufacturers who see margin augmentation by deploying direct-to-consumer models. 

Kalle Aerikkala, Business Consultant:

2021 will be the year when diversity in pricing models will become mainstream in aftermarket industry. This is supported by shift to remote sales and support operations to a largest extent. That has created sense of normality for many operations to share some of their data within their value creation network. Furthermore, this is driven by the comparably low cost of capital; a growing balance sheet is no longer seen as being as big of an issue as before. This allows companies to shift their revenue from ad-hoc services to recurring. Customers will still need to make sure that they provide high value add but they will have more freedom to differentiate through business model.

Israel Rodrigo, Business Consultant: 

After 2020 contraction on demand, 2021 will be the year for increased demand and heavier/tougher negotiations between all participants on value chain. Digitization of commercial channels are a reality and price transparency will accelerate in the way profit exchange hands. Loyalty programs typically implemented in B2C will propagate in B2B environments where complex incentive programs (price masking) will be an increasingly high determining factor on the negotiation process.

Ecommerce footprint growth across all industries will increase the perceived value for logistic services. Expected increase of shipping cost due to capacity constraints will require enabling technology to ensure CTS recovery opportunities as additional revenue stream.

Slower-than-expected recovery in certain cash-starved industries will lead to bankruptcy of smaller companies, and heavy M&A activity with consolidation, monopoly, and dominance of large players.

Geopolitical tensions, raise of nationalisms, currency volatility might shift decision making power from buying/sourcing from cheaper global alternatives to local providers.

Governments will continue & increase investment on public sectors. Raise of healthcare, manufacturing, services and CPG industries as key contributors to local economies, employment.

Ramin J. Imani, Senior Consultant:

One of the commercial trends that we have spotted since the outbreak of the COVID-19 across multiple industries is that commercial discussions around “price” and “monetization” have got the attention of the executives. This might be interpreted by a group of organizations that the majority of the initiatives or innovation programs, need to be vetted commercially first to show sign(s) for reaching the expected monetization level.

However, for other organizations, this might be seen as a piece of evidence that calls for a return to a passive mode demanding a significant reduction or halt in a majority of initiatives. A part of the former group, however, will start to adopt a price excellence framework around their innovation and initiatives to secure a path for the expected monetization level. A framework that can serve and guide them now during these tumultuous times as well as for the years to come as they gradually nurture and strengthen its component.

Darius Fekete, Business Consultant

The shift to online sales presence will stick as both B2B buyers and sellers recognize the lower costs of doing businesses. Sellers will try to differentiate themselves with providing individualized pricing and a B2C-like customer experience to buyers. This means that sales conversations will continue online and will enlist the help of ecommerce platform. Digital Negotiations will become the new form to interact for the long tail of the business. 2021 will be the year to invent the secret sauce for marketplace models and lock-in channel preferences.

Distributors will explore cheaper ways to expand and manage portfolios. Marketplaces will become more relevant to offer a larger portion of unmanaged items. Procurement teams will pressure distributors to deliver simple ways to interact online and connect to purchasing systems. Customer intimacy and data will present a foundation for sellers to individualize their service offerings. As manufacturers are forced to move sales online, they realize cheaper ways to serve customers directly. Cutting out the middlemen creates a challenge to interact with a higher volume of customer requests.

Manufacturers’ omnichannel presence will require balancing the request load between self-service and salesperson assisted purchasing. Successful companies will build channel management functions to guide customer interactions and sales effort between ecommerce sites, marketplaces, and direct sales.