Pricing large projects and big deals can be difficult in industrial B2B spaces. But with strategic and AI-driven techniques, you can stop the downward spiral of margin reductions and gain more transparency and insights into your key accounts. Learn more from our experts.
When we talk with our industrial B2B clients about their most common issues, many of them name the same topic: They tend to experience imbalanced revenues and wide margins spread throughout their customer base.
Specifically, the sales team generates significant portions of their revenue through key accounts with whom price setting and renegotiation are often determined by opaque and complex procurement processes.
These often result in internal systems that are run based on unsystematized knowledge of project managers, lacking clear analytical and automated bases for commercial decision-making.
AI-driven big deal pricing case studies: How to maximize commercial potential
At Simon-Kucher, we have supported our clients to implement tools in countless projects – providing higher transparency into the procurement processes, while also giving clear guidance on pricing strategies. For example, with AI-driven pricing, our experts have helped our clients to reach …
- 3-4% increase in return on sales due to optimized mark-ups for a global semi-conductor company
- 1-2% increase in return on sales revenue for a spare parts marketplace
- 2-3% increase in return on sales for a leading refractory company in Europe
Price guidance: Why a typical pricing approach doesn’t work for big deals and project pricing
While typically B2B companies rely on a range of pricing techniques ranging from simple cost-plus measures to dynamic pricing, such strategies fail to provide transparency or help ascertain the impact of pricing on sales for the following reasons:
- Complex procurement processes: Your key accounts tend to have multiple rounds of decision-making in their procurement processes. On top, there are multiple price negotiation rounds. But also, your products usually have a time gap between manufacturing and delivery, with fluctuating material and transportation costs. This time delay masks the true impact on end prices
- Risk management from the customer side: Commonly, customers tend to split their product requirements across multiple vendors to better manage supply risks. With price variations across the competitors and varying final customer demand for products, the exact implications for your share of wallet are unclear
- Limited information on market factors: While market shifts tend to affect the broader economic climate, it is often uncertain if typical market indicators are able to capture the sales volatility of your specific products.
Learn how our AI-driven approach can solve these issues
Our Simon-Kucher experts know a solution to many of your most serious revenue problems when it comes to big deal pricing. Our consulting expertise includes …
- Predictive models to forecast market dynamic shifts: Our advanced models identify relevant market factors and predict the sales of the end products as well as key “turning points” of market-shifts that can be leveraged in downstream pricing decisions
- Capacity plans for your customers: Our enhanced data models leverage long-term and short-term capacity plans combined with market indicators’ predictions to infer your share of wallet implications
- Elasticity models to account for price sensitivity: Once capacity plans and market factors are clearly established, we can build customized elasticity models to compute the price sensitivity of your products to ensure effective pricing
- Capacity and product mix optimization: Once we fully understand your price sensitivities, we can optimize capacity and product mix and subsequent commercial outcomes for improved portfolio management. Our pricing measures support you to update price information for negotiations in real-time.
Our battle-tested approach for big deal pricing
At Simon-Kucher, our project pricing follows a three-step approach to support you with the most difficult key accounts …
- Capturing market dynamics
- Building an AI engine
- Integrating the solution into your pricing workflows
The first step: Capturing the right market dynamics and predicting potential market shifts
Key question: What are the current market dynamics? How likely are they to shift? And how does this impact my share of wallet?
Our experts leverage capacity forecasts of your clients and relevant market indicators (energy prices, material costs) to form a cohesive view of potential high-level sales by your customers. Additionally, we leverage predictive models to forecast shifts in market movement to infer your share of wallet implications.
The second step: Building the AI engine
Key questions: What are the relevant value drivers based on various product factors and market dynamics? How sensitive are sales to the prices defined?
In building the AI engine, we are essentially doing three things:
- Defining relevant value drivers for pricing of new and existing products
- Developing elasticity models to infer the impact of price changes on your sales
- Developing a capacity and product mix optimization model that finds the right price points to optimize your capacity utilization as well as commercial objectives
The third step: Integrating the engine
Key questions: How can this pricing logic be integrated into your current pricing systems? What are the key functionalities of such a system?
Our experts develop price simulation tools that are custom designed for your needs. They consider relevant strategic factors and input in the project steering process. In addition, the impact of our optimized prices can be visualized, and various commercial scenarios can be simulated to check the robustness of your pricing logic. These engines are integrated into your IT environment to ensure that the end sales users have easy access to the results and insights.
Following this three-step approach, we can guarantee you success even with the most difficult key accounts – to significantly improve your profit margins!
How Simon-Kucher can enhance and optimize your big deal pricing strategy
No other consultancy knows more about growth than we do. We live, breathe, and drive tangible growth, running over 1,500 projects every year.
Within our digital practice, Simon-Kucher Elevate, we have true digital practitioners who leverage data, technology, and design to drive digital marketing and sales excellence. With our experts, you always find the big deal or project pricing approach that you need:
- Data-driven approaches: We accelerate projects with a high impact on reduced time horizons, delivering a high ROI through customized and individual pricing strategies
- Experience of over 100 digital strategy and pricing use case implementation projects with positive EBITDA impact
- Combination of industry expertise and data know-how to tailor your use cases for an enhanced business impact
- Database with a longlist of use cases and KPIs with particular focus in B2B industrial
- Translation of business goals into data-related KPIs to monitor progress and the impact of the big deal pricing implementation
Want to know more? Contact us today to learn how we can elevate your project pricing strategy. It's time to join the tech revolution!