Price elasticity has long been a foundational element in B2C pricing strategies, but its application in B2B is still relatively untapped. Kamal Sabnani, Principal Product Manager at Vendavo, explores the importance of incorporating price elasticity into B2B price optimization strategies to unlock significant value and secure a competitive edge.
Businesses today now meticulously track loss data as well as the reasons behind these losses. Vendavo has recently observed a growing trend of companies collecting and analyzing this data, so we’re excited to make an announcement.
We have developed an elasticity-based algorithm to help our customers leverage this data to its fullest potential.
With this algorithm in place, our customers can:
- Maximize data utilization
At Vendavo, we believe you should be able to unlock the full potential of your data. By developing algorithms designed to handle specific types of data, we empower businesses like yours to gather, analyze, and leverage loss data for more impactful decision-making and optimization.
- Get practical and actionable insights
You need AI solutions that work for the strategies and business applications you’re facing every day. We prioritize practical and actionable solutions by reducing data requirements. With Vendavo, you don’t need extensive granular data. We offer a streamlined process that is both efficient and effective.
- Use more relevant and valuable insights in your decisions
Our algorithm is specifically tailored for B2B needs, ensuring that it meets the unique challenges faced by your businesses in this space. After extensive research, we’ve developed an algorithm that stands apart from traditional methods, providing more relevant and valuable insights.
This unique focus on B2B organizations’ needs sets the foundation for impactful results. But how does elasticity-based optimization translate these principles into actionable benefits for your business? Let’s explore the specific advantages of this approach.
How Elasticity-Based Optimization Benefits B2B Businesses
With Vendavo’s Deal Price Optimizer, these principles come to life through a data-driven approach to pricing. Designed with your business needs in mind, the solution empowers you to balance profitability, competitiveness, and strategic alignment seamlessly. Here’s how elasticity-based optimization can help you achieve these goals.
- It aligns pricing with profit and revenue goals
Elasticity-based optimization allows B2B businesses to fine-tune prices based on how sensitive customers are to price changes. This approach maximizes profits on inelastic segments while driving revenue growth for elastic segments, aligning pricing strategy with overall business objectives.
- It leverages loss data to its full potential
Loss data provides insights into the deals lost specifically due to pricing. Incorporating this data into elasticity models helps refine pricing to better align with customer willingness to buy.
- You can identify opportunities where prices can be adjusted strategically
Elasticity analysis highlights where prices can be raised with minimal impact on demand and areas where prices should be reduced to retain customers or gain market share. This targeted approach avoids blanket price changes, ensuring profitability while maintaining competitiveness.
- It enables quantity constraints to limit excessive changes on volumes
By setting constraints, businesses can prevent large shifts in volumes, ensuring price strategies remain practical and aligned with operational capabilities.
- You can incorporate strategic business considerations
Beyond quantitative insights, businesses can layer in strategic considerations to align optimization recommendations with broader business goals and operational realities. This includes limiting excessive price changes to prevent sticker shocks, managing cost pass-throughs to balance profitability and market competitiveness, applying minimum margin thresholds to ensure financial sustainability, and adjusting prices to reflect business expertise, market trends, or competitive intelligence not captured in historical data.
Elasticity-based optimization isn’t just about refining pricing strategies – it’s about creating meaningful, measurable change for your business. By leveraging the right tools and expertise, you can take your pricing approach to the next level. That’s where Vendavo’s proven solutions come in.
How Vendavo Can Help
Vendavo has been powering the profit transformations of global manufacturers and distributors for more than 25 years. A successful profit transformation requires unified pricing, selling, and rebate management – and that’s what Vendavo does best.
Ready to start your profit transformation with AI-powered solutions you can trust? Reach out today to request a demo or speak with an expert about your business needs.