Pricing

Driving Sales Profitability With Pricing Science

By Vlad Gorlov
October 2, 2012

As scientific pricing continues to attract attention in B2B, a discussion whether pricing is art or science has been picking up pace. The “art” point of view emphasizes complex negotiations, issues of product and price perception, human emotions, ever changing dynamics and interactions. This is a very attractive argument, for all these factors are undeniably real.

B2B Pricing: Art or Science?

However, it misses one critical point. It describes an idealized situation, an environment that could better be called “P2P,” or person-to-person. The reality of B2B is multiple sales people selling a large number of products to other companies with only limited time available for each deal. Some deals may not be important enough, and there are too many that are. Sales force rotates all the time, not everyone knows all products and customers sufficiently well. And, let’s be honest, not all sales people are equally good. This is certainly not the high art of selling described at the beginning. And yet this is what companies face every day and they must make good of it.

Pricing Science for Sales Profitability

That’s where Pricing Science comes in. Science cannot entirely take the place of your best salesperson’s intuition. However, pricing science is enormously valuable as a decision support system. It does for sales reps what they don’t have time to do on their own.

By using most of the relevant information and guiding close to the right price, it helps capture a large share of what otherwise is left on the table. Top sales skills can refine that and capture even more but the value of the first step cannot be overstated. This way it raises the effectiveness of every salesperson.

A Final Thought

Pricing science, when embedded in your systems, becomes an enterprise capability. It belongs to the company and cannot be hired away as may happen to your best sales people. Growing and improving with the business, it will continue to deliver consistent value today and in the future.

– Vlad Gorlov

    Vlad Gorlov

    Vlad Gorlov is Director of Pricing Science at Vendavo. In this role, he is responsible for pricing science implementation projects, pre-sales efforts, as well as product and methodology development. Prior to joining Vendavo, Vlad was Modeling Practice Leader at Nomis Solutions, where he oversaw analytical work on pricing optimization engagements across North America and globally. Prior to Nomis, Vlad held a number of positions in pricing, marketing optimization, and customer analytics. Vlad holds an MA in Economics from Yale University and an MS in mathematics, and has over 15 years of experience in pricing, mathematical modeling, and advanced analytics across numerous industries.