What is B2B & B2C Pricing?

The terms B2B and B2C are frequently used business terms. But what do these terms mean? And how do B2B and B2C relate to pricing? B2B stands for “business-to-business”, these are companies that sell goods or services to other companies. B2C stands for “business-to-consumer”, these are companies that sell goods or services to consumers.

At first glance, B2B & B2C mainly differ because of who pays the price tag, but nothing could be further from the truth. B2B & B2C differ from each other in different ways besides targeting a different kind of customer. The differences in the pricing process can be categorised in three different domains: Customers, Data availability & Sales/Marketing Team, which we will explain in more depth in this article.

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Customers

The typical “customer” differs greatly for B2B and B2C companies. In general, B2C companies have more customers than B2B companies. This is simply because there are more inhabitants in a country than there are businesses. Due to the differences in customers, the pricing also differs.

Where B2C companies generally have a uniform price for everyone, B2B companies usually have specific prices for certain customer(s) (groups). B2B companies usually differentiate by how big a company is, and to some companies they offer a cheaper price than others. However, in B2C it is not common to have different prices for the same product.

In addition, customers of B2C companies are usually more influenced by psychological and emotional factors than the customers of B2B. Customers of B2C usually buy products for themselves and want to feel good and satisfied with their purchase. For these customers, emotion plays a greater role than for B2B customers. Customers of B2B companies usually look for solutions to business-specific challenges and often opt for a more structured purchasing process. As a result, emotion plays less of a role in their business purchases.

Finally, in the B2B market it is also more common to negotiate on the price. The majority of B2C companies do not do this and have fixed prices for each customer.

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Data availability

For optimal pricing, it is essential to have as much quality data as possible in order to set the right price. This data can consist of the competitor’s price, the willingness of customers to pay or other factors. For B2C, data availability is a lesser challenge than for B2B.

For B2C, the prices of the competition are often easy to find. These can often be easily and automatically obtained from the internet with so-called “scrapers”. You often see that B2C companies give discounts, which can lead to differences in the data. Ultimately, this is not beneficial.

For B2B, on the other hand, it is challenging to figure out the prices of the competition because B2B companies often have different prices for different customers. These are also often only available on request and difficult to find out for the competition.

In addition, it is also a lot more challenging for B2B companies to conduct customer research than for B2C companies. This is mainly because B2B customers have special requests more often than B2C customers. These requests determine the price that a B2B company can charge the customer. Finally, the available data for B2B is also more limited because lost deals are often not registered.

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Sales & Marketing team

Sales & Marketing teams often have a significant influence on companies’ pricing. This applies to both B2B and B2C. In addition, there are large differences in the pricing strategies and capacities used in both the B2B & B2C markets. Some companies really focus on pricing, while other companies take the “easy” road and only try to undercut the market leader, for example. However, there are good growth opportunities for companies that focus on pricing with well-founded data and pricing knowledge.

The effect of the prices chosen by the marketing & sales teams has a major influence on the profit margin of the companies, it is therefore advisable to appoint the right teams with the right capabilities to these subjects.

For the most part, these themes make the difference in pricing between B2B and B2C. But how can B2B & B2C companies use this information best and take the next step in their pricing capabilities? Let’s dive deeper into that, with the help of the Pricing Maturity Model.

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B2C Pricing

The most appealing example of B2C Pricing is that of Amazon. Their pricing, in which smart algorithms and experiments are continuously used, is also known as Pricing 4.0. For B2C companies, it is easier to move into pricing maturity than B2B companies, because the data availability for them is better and a large volume of customers opens up more opportunities for testing and machine learning.

For many B2C companies, pricing is already a process that makes use of relevant factors, such as competitors’ prices or pricing research. However, B2C companies can take the next step in pricing by seeing it as a system and predicting and optimizing prices. This can be done with the right software and smart algorithm.

SYMSON uses Artificial Intelligence (AI) and Machine Learning (ML) to predict and optimize prices. In addition, SYMSON sees this as a continuous process, in which prices are constantly updated in order to always offer the optimal price. If you as a B2C company can automatically predict and optimize prices, you would take a step that distinguishes you from the competition.

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B2B Pricing

For B2B companies, the biggest pricing challenge usually lies in structuring and scaling the pricing process (Pricing 3.0). The use of pricing software can offer enormous added value in automating pricing and making it less dependent on sales people, intuition or spreadsheets.

B2B companies generally view pricing as a project of trying to sell the right things to the right customer for the right price. These companies often still use Excel, Power BI and simple business rules for their pricing strategies.

B2B companies can take the next step in pricing by approaching this as a process, just like B2C. B2B can do this by moving from manually compiling prices for customers to automating pricing. With SYMSON, companies can easily automate this and this can save you a lot of manual and simple work. This gives pricing managers more time for more complex issues.

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B2B & B2C Pricing – Conclusion

Choosing the right pricing strategies is very different for B2B and B2C. This is because factors critical to pricing differ between these two types of businesses. The good news is that B2B and B2C can easily take steps to improve their pricing for better profit margins and increased revenue.

SYMSON has experience with AI pricing software for both B2B and B2C companies and can help companies take the next step towards pricing excellence.

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