Are You Being Intelligent About Your Pricing?

In today’s age of e-commerce, consumer-like buying behavior is increasingly seeping into B2B procurement.

In today’s age of e-commerce, consumer-like buying behavior is increasingly seeping into B2B procurement. Buyers are constantly vetting their options - making sure they are getting the best price, at the best time, on the best products. It’s a reality that makes it important for distributors not only to know what their competitors are carrying, but also what they are charging, even if it is a list price.

Offering the wrong assortment, or offering the right assortment of products, but at the wrong price, can have immediate and severe ramifications.

In cases where deals are mostly closed behind a handshake, sales people may undervalue their product to ensure a booking. The absence of accurate pricing intelligence and guidelines result in a lot of value being left on the table.

In other cases where transactions are done via a login, the complex mix of categories with large and geographically scattered pricing and merchandising teams create a hurdle. Until recently, most distributors relied on the sales team’s gut and anecdotal evidence to inform their pricing decisions.  However, with the advent of e-commerce, pressure to be more competitively priced increased.  

Some distributors chose to manually gather pricing insights to make smarter pricing decisions. However, it had limitations:

  • Time Consuming: Manually searching competitors’ websites and catalogues takes time. Even one product, one SKU number can take hours to effectively research.
  • Error prone: We all know that to err is human. This is understandably true of configurable products - apparel sizes, computers where chips and performance upgrades can be added, products that can be sold with additional attachments, etc. - but errors are also commonplace for the simplest and most straightforward items.
  • Inaccurate: There are multiple causes for inaccuracy in data. The product image or SKU number might be different across competitor sites or even within the distributor’s database. Difference in Units of Measure (UOMs) cause further complications when price comparing across multiple competitors.
  • Irrelevant: Unfortunately, pricing decisions made on the basis of manual competitor pricing insights are rarely relevant by the time they are put into effect. In today’s dynamic pricing world, access to real-time pricing insights is key.

Some others evolved or opted for approaches that leverage advanced technology to gather insights. Those that have been successful tended to include the following steps:

  • Identify Key Value Items (KVIs): Gathering competitor pricing insights for a distributor’s full assortment is daunting. Begin by prioritizing products that have the most impact on revenue. Many distributors choose to continue gathering insights for only KVIs as the ROI will be higher.  
  • Accurately match items: In order to accurately compare price, it is important to identify similar products to your KVIs in a competitor’s assortment. This includes looking at characteristics such as product descriptions, color, size - particularly dimensions and weight - and other factors. The more information you can gather, the closer your matches will be, and the more accurate your comparisons.
  • Normalize UOMs: It goes without saying that it’s important to factor in the size and/or quantity of products when determining price. But mistakes are often made when different units of measure are used, particularly when converting between the metric and standard systems.
  • Factor store or region-specific data: It can be of great value to compare prices of products by region or season. It will result in a well-informed, competitive pricing strategy.

One Fortune 500, multibillion dollar, diversified North American distributor illustrated how transformative the switch to automated systems can be. Within four weeks of its initial deployment, the distributor had reliable pricing insights - updated twice weekly - on 25,000 KVIs for its seven largest competitors.

Not only can the distributor now track exponentially more KVIs than possible when using manual processes, but the resulting data is fed directly into its ERP system and is available to decision makers to aid in pricing decisions. Decision makers can see in a glance how their prices compare to the competition, as well as how many overlapping products they share with them. With this level of competitive intelligence, they are now able to set their prices more competitively and continue to be the first choice for their customers.

Mihir Kittur is co-founder and chief commercial officer of Ugam, a global data and analytics company. To learn more about the application of data and analytics to make confident business decisions, visit