COVID-19 has brought with it a wave of uncertainty that is still spelling trouble for numerous businesses. Many B2B businesses were caught off-guard when they had to change the way they worked suddenly and this caused some to even collapse in the wake of the pandemic. Although others survived, there is still confusion in the air. While the pandemic is far from over, you can still do something about your pricing strategies which are important now more than ever. While real time price optimization should not be overlooked, here are some additional changes that should be made during this pandemic.
Understand the Issues:
Before you begin forming your pricing strategy, you need to thoroughly understand the issues that your customers are facing during the pandemic. And you need to think through the constraints that you are experiencing as well. How have your customers been impacted by the crisis? Are they willing to spend less than normal? Are these customers requesting discounts? Are you facing shortages and how much are you paying for what you are buying? You should inspect every aspect of your spending so you know about all the issues that are affecting your business. This can help you create a pricing strategy that is suitable for your business.
Price discipline is crucial even in the case where your business has seen a decline in demand during this pandemic. You should not go ahead and cut prices because cutting prices does not guarantee you will have more takers. Moreover, three major problems will occur. First, you can start a price war. Second, your profits will reduce. Third, your brand value will reduce which can affect your brand permanently. As you probably won’t be able to supply as much as usual due to restrictions, you want to ensure you protect your prices at all costs during this situation. If you have a short supply of certain products then you should tread with caution when setting prices.
Shift In Value:
During the pandemic, every individual is thinking hard about value. But how does that tie into pricing strategy? Let us explain. Your customers won’t be ordering as usual from you. Some might prefer smaller packages compared to before while others might shift when it comes to product mixes. Whatever changes are taking place, you should make a note about them so you can determine your pricing strategy accordingly. Using price optimization software can help you understand in detail how customer value has shifted and you can spot trends. This can help you set your prices strategically.
Focus On Particular Businesses:
The 80/20 pricing framework is something that you should consider during this ongoing pandemic. This framework divides your customers into four quadrants. While you should focus on all your customers at this point, you should focus on the ones that are responsible for driving your sales. You have to protect them now more than ever because they are the ones who can help keep your business afloat during this time. You might need to put in more effort than normal, but in the end, it will be worth it. You want to set your prices accordingly. This can be difficult to do without a software tool though so investing in one is important.
The customers who are most important to you should be provided with additional value because they have been affected at this time too. You should try and build your pricing strategies such that all your customers benefit from it. For example, you can waive shipping fees for your customers and you can lower the minimum order quantity. Remember, what you do now and how you treat them now will be imprinted in their mind and this will impact your future well after the crisis is over. You want to ensure you try your best to balance out how much value you provide and how much you make because you will need it to recover after the crisis is over.
Now is the best time to innovate and collaborate. If you have been planning to launch new products then now might be the right time to do so especially if the demand for such products has increased in recent times. Now is the time to break boundaries and think about alliances because working with other businesses can be of benefit to everyone. Take the example of Hilton Hotels that has partnered with Amazon among others to place hotel workers in jobs until things get back to normal. You can think about adding new partners and thinking of pricing strategies that will have a positive impact on everyone involved. Price optimization software can help.
Advertising has taken a hit during the COVID-19 crisis as many businesses have reduced how much they spend on advertising. But that doesn’t mean you should seize all advertising even if you think you won’t sell as well as usual. You want to tweak your marketing strategies because B2B buying will still take place albeit slower than usual depending on which industry you operate in. Stay away from aggressive marketing processes because they won’t get you far in the case of non-essential items or those items which aren’t in demand. When building a pricing strategy think of where you can cut on advertising and where you can invest instead.
Stay-at-home orders are still present in many countries as COVID-19 cases surge which means more businesses are operating remotely. This is the time to make the digital shift if you haven’t done so already. Although price erosion might be your biggest concern at this point, studies show that not shifting to digital channels has a higher negative impact than many B2B businesses realize. You must understand that people are willing to pay up to 5% more if they get a good buying experience and if they are provided proper pricing information. You can use pricing optimization software to ensure you get a profit when you sell online.
You cannot underestimate the importance of real time price optimization anymore. While the strategies above are important, a complete software tool that addresses your pricing concerns is fundamental for the growth of your business. It will provide insights so you can make the best pricing decisions that will fuel your business growth and ensure your consumers are happy too. For this win-win situation, you should not compromise when it comes to price optimization software.