We continuously research the drivers of pricing power for B2B companies. And we often take a moment during that research to look at the statistics around the prices in incoming data, the optimised prices, and the broader implications.

It's incredible how often we encounter resistance from senior staff within a B2B business to raising prices, sometimes supported by a barely-whispered fear that their prices are already too high.

We decided to investigate further and dig into our data to see if there was evidence of widespread over-pricing of B2B products.

The results were surprising. And resounding.

What did we discover?

In our search of data on over-pricing, it turns out that there is chronic evidence of the exact opposite. We found that 98.7% of all the B2B products that we analysed were underpriced by at least 1%. Now, 1% sounds small, but if you considered adding it to your revenue without any loss of business and no additional costs, that's quite attractive. Every penny hits the bottom line.

What did we analyse?

We sampled 614 different B2B media, information, data, events and software products with a minimum of 2 years of sales history, the background macroeconomic, market, and competitive influences. We ran them through our pricing engine to model customer behaviour and identify optimal price points, and then we looked at the results.

What did we find?

Across the sample of products we analysed, there was widespread underpricing, which indicates that:

• Only 0.3% of products are overpriced (commercially speaking);
• 0.9% of products are within 1% of their optimal price;
• 98.7% are underpriced by at least 1%;
• 88.7% are underpriced by at least 3.5%;
• 59.9% are underpriced by at least 5%;
• 26.9% are underpriced by at least 7%;
• 6.8% are underpriced by at least 10%; and
• on average, products are underpriced by 5.8%

What does this mean?

Suppose we extrapolate the 88.7% to a typical mid-size business with $200m of revenue. $7m of revenue opportunity has been lost simply by having the wrong price!

Typically, price changes drop straight through to profit. If your operating margin is 20%, you would have to deliver an additional $35m of sales at current prices to generate an equivalent impact.

What can we do?

For many B2B businesses, the price-setting process involves an annual assessment of costs as part of the budget cycle and then testing different prices with gut instinct and internal discussion to support a marginal increase.

We all think we know our customers and how they will react if we change our prices. Still, the evidence suggests that we consistently underestimate the value and importance our customers place on our products and their capacity to pay more.

Getting pricing right is hard. And there is an understandable tendency to err on this side of caution, as the results show. Plugging the value gap is technically challenging, time-consuming, and often fails to overcome the human biases inherent in a manual approach. But, by using the rich information buried in our sales and finance system, along with market and macroeconomics, you can close that gap. And the role of Profisy is to make that as easy as possible, helping you optimise your B2B prices in as little as 24 hours.

Based on this data, it might be worth giving it a shot!