Pricing

Crowdsourcing the Sales Guidance Problem

By James Marland
November 15, 2011

I came across this excellent website, ancientlives.org, where you can collaborate with Oxford University in transcribing ancient Greek texts. The University has literally thousands of fragments to examine, and it has taken the approach of crowdsourcing: breaking up a complex problem into many tiny pieces so that it can be parcelled up into little packages that anyone can work on if they have a spare 15 minutes.

There are similar collaborative efforts on the web for transcribing old weather charts, classifying galaxies, folding proteins and searching for aliens.

So what does this have to do with Pricing?

In order to crowdsource, a problem needs to be capable of being sliced up into small pieces, and a mass of well-informed potential collaborators should be on tap. So in pricing, the collaborators should be our sales teams and we could set up some clever website like the ones above. Sales people could sign on, be given a sample scenario and prompted to price a few products, based on their knowledge of the segment. However, this is unlikely to work: no time, no incentive.

But, if we look at our historical invoices, we can view them as a crowdsource experiment that has already occurred. The actual invoice price is the output of a sales rep who evaluated the market, the product, the competition and came up with the best price. The price on the invoice is the data point we need: we now just need to aggregate and analyse.

In any crowdsourcing project, you learn to assign more weight to more experienced and more dedicated participants (in Ancient Lives, I am still flagged as a novice) and this makes sense when you analyse prices too: More experienced reps will get higher weight than rookies. This is what B2B Pricing Software does: automatically hunting through segments, and proposing a target for maximum profitability.

– James Marland

  • B2B Pricing Software , Best Price , Crowdsourcing , invoice prices , profitability

    James Marland

    James Marland is the Director of Business Consulting at Vendavo based in London. In this role he helps diagnose Pricing Opportunities and develops business cases for pricing projects with ROI models. James has been in the pricing software space for many years, both on the customer and supply chain side: so he has a view from “each side of the table”. Prior to his pricing career he was VP of Solutions at Ariba and has also spent 5 years at SAP America. He has a Bachelor of Science degree in Mathematics from the University of Southampton.