Are you struggling with efficient price management on your B2B platform? We presume there are a bunch of yeses. There is no doubt that running an online business comes with its own set of challenges, and pricing ranks high among them. Your pricing strategy can be the game-changer that empowers your business to thrive in the highly competitive e-commerce market.
Our article will cover:
- Defining the terms "transactional price", "trading terms", and "pricing policy";
- Exploring the factors that shape product pricing in B2B e-commerce;
- Explaining the vital role of pricing policy in implementing B2B ecommerce platforms.
The must-know terms in B2B commerce
Transactional price & Trading terms
In the B2C sector, each product or service is associated with a singular, publicly available price. However, the scenario differs for B2B clients. The use of the term 'transactional price' is prevalent in B2B, referring to the negotiated price for each individual transaction between a supplier and client.
The process of transferring prices to B2B ecommerce platforms is complex and heavily relies on trade terms. These terms and conditions serve the purpose of establishing transparent collaboration frameworks for suppliers and clients, including aspects such as payments, delivery times, and after-sales support.
Pricing policy
The price policy is a plan for setting prices for products or services in a B2B store. Trade terms are an important part of this plan because they affect the final costs. It is therefore crucial to make sure that the price policy and trading terms and conditions match the brand's goals and values in every transaction.
To succeed in e-commerce, it's important to create a pricing policy that fits your organization's unique characteristics, the industry you're in, customer preferences, and strategic objectives. Finding the right balance between competitive pricing and satisfactory rate of return is what determines success.
Curious about B2B product pricing? Unraveling the factors behind the final price
The pricing dynamics in the B2B sector are influenced by several factors. Let's examine the essential components that warrant consideration when formulating a pricing strategy.
Cost analysis
Make sure you know all the costs of producing and delivering the product or service before deciding on the price. The final price is influenced by delivery charges, taxes, and post-sales support among others.
It's important to consider both direct costs (e.g. materials, machinery and tools, logistics) and indirect costs (e.g. administrative costs, marketing costs, infrastructure maintenance).
Market segmentation
B2B companies cater to diverse customer segments with unique needs and preferences, requiring a pricing strategy that adapts to market segmentation and targets specific groups for maximum impact.
Price negotiations
B2B market is driven by contracts, trade connections, and long-lasting partnerships. In price negotiations, suppliers and customers take into account various elements, including order size, contract duration, payment terms, and additional services.
Competitor pricing
In determining prices, competitor price analysis is of great importance. By analyzing competitor prices, a company can make informed decisions about its own pricing strategy and effectively compete in the online market.
Comparing competitor prices is straightforward in the B2C sector, but in B2B, prices are often only visible after logging into the client portal. Additionally, the dynamic market and diverse pricing for different customers and segments make comparative analysis challenging in B2B.
Product life cycle
The pricing policy may change based on the product's life cycle phase. For instance, during the initial introduction, a company might use lower prices to attract customers and then raise the price later on.
Is your B2B ecommerce missing out on profits without a pricing policy?
In the modern world of e-commerce, a company can no longer solely depend on salespeople's experience and must adopt a clear pricing policy. Given that sales representatives have specific working hours and customers make purchases at different times, there is a requirement for a project that encompasses more than just technological aspects.
Suppose a B2B client places an order for a pallet of bricks and wishes to obtain a 5% discount on a single brick. In that case, company employees should possess the ability to negotiate following predefined rules. Moreover, if the business client has added items to their cart, they should have the option to check the remaining amount needed to qualify for a particular discount without involving a salesperson.
When implementing an ecommerce solution, it is also crucial to establish a pricing policy in order to create a robust sales platform. Properly defining prices boosts customer trust and prevents any confusion or misconceptions. In addition, transparent pricing guidelines play a crucial role in effective price management and maximizing profits, taking into consideration various factors, including product costs, profit margins, and customer preferences. Let’s picture a company generating hundreds of millions in turnover, with profit margins ranging from a few to several percentage points. In this scenario, implementing a pricing policy can boost margins by even a few percentage points.
I hope that the topic of prices in the B2B sector caught your interest, and you want to find out more about the solutions that are implemented in modern organizations. Should we keep going on this topic?
Eager to explore the challenges confronted by B2B businesses? Don't miss out on the B2B Master Class webinar series, where you can learn about industry trends, gain expert advice, and discover effective solutions. Our discussions often touch on the intricacies of setting up ecommerce and PIM systems. Secure your spot now – it's free!