pricing technology myths e book pb
TRANSCRIPT
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2014 MindBrew, LLC. All rights reserved. This publication may not be reproduced or distributed in any form without MindBrews prior written permission. This publication containsthe opinions of MindBrews research and editorial organizations and should not be construed as statements of fact. The information contained in this publication has been obtained
from sources believed to be reliable, however MindBrew disclaims all warranties as to the accuracy, completeness or adequacy of such information and shall have no liability forerrors, omissions or inadequacies in such information. The opinions and information expressed herein are subject to change without notice.
P R I C I N G B R E W R E S E A R C H R E P O R T
Seven Myths and Outdated Beliefs That Are Causing
Companies to Fall Further and Further BehindMYTHVS
REALITY
Pricing Technology
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Pricing effectively in B2B has never
been easy. But today, increases in
pricing transparency, information
access, and global competition are
conspiring to make a difficult taskeven more challenging.
For many companies, memories of
the last downturn are all too clear.
And as a result, most are focused on
driving efficiency and productivity
to maintain financial health.
In this situation, pricing technology
would seem to be the right solution
at exactly the right time.
After all, pricing has more leverage
on profitability than sales volumeor operating costs. And technology
has long been a proven source of
efficiency and productivity gains.
So the combination seems ideal.
SOURCES: PricingBrew PricingPulse and SellingBrew SalesPulse Studies Copyright MindBrew May not be used or reproduced without permission.
Pricing Effectively
in B2B Is BecomingMore Challenging
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At PricingBrew, we interact with
tens of thousands of B2B companies
across a variety of industries.
We conduct practitioner surveys
and interviews to uncover and
report on the most effective B2B
pricing practices and capabilities.
And weve made it our business to
stay up-to-date on the latest trends
and developments in the pricing
technology landscape.
Given the benefits that the pricing
technology users report, we wanted
to understand more about those
that arent using it:
Why arent these companies
using pricing technology?
What are the factors that have
been holding them back?
What do the technology users
know that others may not?
47% 53%
YES NO
Does Your Company Use Pricing Technology?
SOURCES: PricingBrew PricingPulse and SellingBrew SalesPulse Studies Copyright MindBrew May not be used or reproduced without permission.
So Why Are These
Companies Sittingon the Sidelines?
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Surprisingly, the common causes
of inaction weve identified arent
based on current organizational,
technical, or financial realities.
The pace of technological change
and development over the last 3-5
years has made it very difficult to
keep up and stay current.
As a result, many of the non-users
are simply misinformed about keyaspects of the pricing technology
landscape as it exists today.
In effect, these companies are being
held back by perspectives and views
that may have been accurate just a
few years ago, but have since beennullified by technological evolution
and advancement.
Seven of these pricing technology
myths and misconceptions are very
common...and costly.
SOURCES: PricingBrew PricingPulse and SellingBrew SalesPulse Studies Copyright MindBrew May not be used or reproduced without permission.
Many Companies
Hold Outdated andInaccurate Views
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Some companies believe that only
the largest companies can benefit
from pricing technology and that
their company is simply too small
to warrant it.
Because they could afford to fund
the initial R&D, multibillion dollar
companies were indeed the driving
forces behind the development of
the first major pricing solutions.
However, the efficacy of pricing
technology is less about scale and
more about complexity. And large
companies certainly dont have an
exclusive on having to price lots of
products to lots of customers.
Our research shows that while the
larger companies still represent the
bulk of the pricing technology user-
base, utilization amongst smaller
companies is growing quickly.
Its Only for GiantCompanies...WereToo Small for It
SOURCES: PricingBrew PricingPulse and SellingBrew SalesPulse Studies Copyright MindBrew May not be used or reproduced without permission.
PRICING TECHNOLOGY MYTH
#
1:
35%
33%
17%15%
$5+ Billion $1-$5 Billion $500M-$1B $250M-$500M
Pricing Tech Users:Size of Business
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Some companies are under the
impression that their industry is so
unique that theres no way pricing
technology could help.
They see companies in different
industries reaping the benefits of
pricing technology. Rather than
being encouraged and motivated,
they simply say, Yeah...but our
industry is different.
But no industry is immune from the
problems that pricing technology is
designed to address. And no sector
operates without buyers and prices.
Our research confirms that the use
of pricing technology isnt limitedto a handful of industries. We see
adoption and utilization across 14
different B2B verticals---from
high-tech and building products to
education and agriculture.
SOURCES: PricingBrew PricingPulse and SellingBrew SalesPulse Studies Copyright MindBrew May not be used or reproduced without permission.
Its Only for CertainIndustries...And OurSpace Is Different
PRICING TECHNOLOGY MYTH #2:
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Weve also found that companies
have a limiting belief that pricing
technology is only for certain
business models.
Manufacturers will conclude that
because they sell through channels
and are removed from the ultimate
customer that pricing technology
would be of little use to them.
But here again, wherever there is abuyer being offered a price, pricing
technology can help improve and
optimize those interactions.
While distributors and retailers
were indeed the primary users of
pricing technology in the past, ourresearch shows growing utilization
amongst manufacturers.
These manufacturers are clearly
tired of sending their margin
dollars downstream.
SOURCES: PricingBrew PricingPulse and SellingBrew SalesPulse Studies Copyright MindBrew May not be used or reproduced without permission.
Its for Retail andDisties...But Werea Manufacturer
PRICING TECHNOLOGY MYTH #3:
11%
52%
37%
Services Manufacturing Distribution & Retail
Pricing Tech Users:Type of Business
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Holding some companies back is
the belief that if they implemented
pricing technology, theyd need to
hire a lot more pricing people just
to manage the new systems.
This is a perplexing misconception
as technology can improve speed
and efficiency and often reduces,
rather than increases, the need for
additional headcount.
Recognizing how technology can
enable human resources to scale
themselves, companies with very
small pricing teams are leveraging
pricing technology to accomplish
what even the largest pricing teams
cant hope to accomplish manually.
According to our research, nearly a
third of the companies making use
of pricing technology have no more
than five pricing people.
SOURCES: PricingBrew PricingPulse and SellingBrew SalesPulse Studies Copyright MindBrew May not be used or reproduced without permission.
Wed Need a LargePricing DepartmentJust to Manage It
PRICING TECHNOLOGY MYTH #5:
31%
23%
21%25%
1 to 5 6 to 10 11 to 25 26 or More
Pricing Tech Users:Size of Pricing Team
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Even just a few years ago, pricing
technology required a multimillion
dollar investment. So its not too
surprising that many companies
still believe this to be the case.
And while pricing technologies can
be expected to generate significant
ROI, returns are irrelevant when
you simply do not have the money
to invest in the first place.
Today, however, the investment
picture looks very different.
As vendors have moved to SaaS
delivery, theyve also embraced
subscription pricing to reduce the
upfront investment and align theongoing costs to the benefits.
The most sophisticated pricing
technologies are now within reach
for the cash-strapped companies
that need them most.
Its So Expensive...Theres No Way WeCould Afford It
SOURCES: PricingBrew PricingPulse and SellingBrew SalesPulse Studies Copyright MindBrew May not be used or reproduced without permission.
PRICING TECHNOLOGY MYTH #6:
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Amongst the companies not using
pricing technology today, there is a
shocking lack of urgency.
To their way of thinking, it doesnt
matter when they get started and
they can hold off until they have no
other choice but to act.
The problem, however, is that there
is an experience curve with pricing
technology---i.e. the longer you useit, the more effective you become.
And those who are currently using
pricing technology (many of whom
are likely to be competitors) are not
standing still, waiting for others.
As our research shows that nearly
60% of current pricing technology
users plan to take it even further,
the capability gap between the
haves and the have nots can
only get wider.
SOURCES: PricingBrew PricingPulse and SellingBrew SalesPulse Studies Copyright MindBrew May not be used or reproduced without permission.
Weve Still GotPlenty of Time toGet Caught Up
PRICING TECHNOLOGY MYTH #7:
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As companies tend to be secretive
about their pricing, its easy to miss
the fact that pricing technology is
becoming much more ubiquitous
and mainstream in B2B.
Companies large and small, across a
broad range of industries, are using
pricing technology to improve their
performance and gain advantage.
For others, however, inaccurateviews and outdated beliefs about
pricing technology are keeping
them on the sidelines and causing
them to fall further and further
behind in the capabilities race.
Dont let myths and misconceptionshold you back. In just the last few
years, the technology landscape has
changed dramatically.
So even if youve looked before, its
time to look again.
THINK
AGAIN
SOURCES: PricingBrew PricingPulse and SellingBrew SalesPulse Studies Copyright MindBrew May not be used or reproduced without permission.
Myths Are Costly...
the Reality Is MuchMore Profitable
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To further the advancement of best practices and innovation
across the global business community, free distribution of this
research report has been generously underwritten by:
SOURCES: PricingBrew PricingPulse and SellingBrew SalesPulse Studies Copyright MindBrew May not be used or reproduced without permission.
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