Do You Need a New B2B Pricing or Packaging Model?
If you are facing stagnant or declining sales on one or more products and services, it may be because the way you are either packaging or pricing (or both) is not resonating with your prospects and customers. No matter how well you think you are doing, it never hurts to take a fresh look, not only at what you are doing in terms of your B2B pricing and packaging model(s), but what your old and new competitors are offering. Please don’t wait until they take market share from you. There are many examples of contenders who took market share away from industry leaders who became complacent because “what we are doing is working fine…no need to change.”
My mantra is that you should always disrupt yourself before the market gets a chance to disrupt you. Speaking of which, there is a book worth reading titled Disrupt Yourself: Putting the Power of Disruptive Innovation to Work, written by Whitney Johnson.
B2B Pricing and Packaging Models
Here is where the options open up for you. Thirteen B2B pricing and/or packaging models are listed below, each designed to either help you sell to more customers, sell more often to existing customers, or achieve higher price points. This is not an exhaustive list, and if one of these models doesn’t fit, perhaps it will spark another idea to help grow your revenue.
- Repackage your products to appeal to a new or broader audience (e.g., new vertical or horizontal markets).
- Find lower cost and/or more efficient ways to sell. For example, you can replace direct sales with e-commerce, telephone calls, or free trial offers.
- Offer add-on products or services. If you are a product company, consider adding a service component. Likewise, if you are a product supplier, add a product revenue stream. In a former life, I was director of marketing at Group 1 Software, which was a spin-off from a services company. This model certainly worked for Group 1 because it soon far eclipsed the revenue of the parent company and was eventually purchased by Pitney Bowes for $321 million.
- Open up a new channel (e.g., distributors, resellers, VARs, strategic alliances).
- Merge with or acquire other companies to achieve greater market or product depth and breadth.
- Adopt “all you can eat” pricing, where users or customers can utilize as much, or as little, of your products and services as needed for a set price.
- Offer a subscription service with monthly or annual pricing.
- Sell access to your customers. You can do this by offering your list, affiliate, joint offers, data, research, or whatever has value to third parties.
- Provide a “freemium” model. Give customers no-cost access to your (limited) product or service, with the intention to upgrade them to a paid model. QuickBooks is a good example.
- Provide a free trial. In this model, you give customers a taste of your product for a period of time before they commit. This works well for companies that can create stickiness where users won’t want to give a product up once it is in use. Salesforce.com, Norton and LinkedIn Sales Navigator have successfully deployed this model.
- Create a platform. Platforms are online connectors of buyers and sellers. Examples on the consumer side are Airbnb, VRBO, and hotel sites. On the B2B side you have companies like com, which allows companies to input their shipping needs and receive bids from transportation companies. Another example is Maistro, which provides an online marketplace to give businesses access to a global network of vetted service providers.
- Value-based pricing. The concept is to price products or services based on the value received by the customer, in areas like time, usage, or demand vs. supply. Value-based pricing can also be based on outcomes – such as receiving a percentage of savings or new revenues achieved.
- Tiered Pricing. Sometimes, you can sell more by providing pricing options. The entry-level tier price is designed to attract new clients with a basic set of features, and each upgrade adds more goodies at higher prices. For a great example of how this works, visit field service management software provider BlueFolder, which offers different pricing/feature tiers: Team, Business and Enterprise editions.
Perhaps one of these 13 options will be a good replacement, or addition, to what you are doing now. If not, hope this provided some food-for-thought as you develop your own model.
Note that this post was excerpted from the book, The Expert’s B2B Revenue Growth Playbook.
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