SHORT
CUT
WORTH THE PRICE
Dynamic pricing and revenue management for B2B companies
Production buildings, machinery and
established supply chains all generate
high set-up and fixed costs, which can be a
problem if this expensive production
capacity isn’t utilized 24/7. This unfavorable
scenario is quite a frequent one, even in
the mechanical and plant engineering
segments and the process industry, where
last-minute orders from B2B customers
are no rarity. A potential solution to this
problem, and one that the B2B sector
has made little use of to date, is revenue
management.
The systematic application of dynamic
pricing methods can help manufacturers
achieve optimal utilization of their production
capacities – and thus generate the
highest possible revenues.
The principle behind this practice is particularly
familiar from the travel industry:
customers who can plan long term or are
highly flexible can get real bargains. But
those who need to book a flight, train ticket,
rental car or hotel room at short notice for
a particular date pay substantially more.
Dynamic, detailed, differentiated
This approach promises enormous advantages
in the B2B segment as well, with
systematic revenue management enabling
gains of three to eight percent. 1 It’s every
boss’s dream. Still, most B2B companies
are only just beginning to adapt their prices
or capacities in response to fluctuating
demand. 2
each customer segment. Findings regarding
customers’ ability to pay at particular
times, information on capacity and
resource planning, and supply chain data
are all factored into the pricing scheme.
While very few B2B companies already
apply such a comprehensive system, things
are changing.
Clear differences between industries
The pharmaceutical, oil and steel sectors
as well as paper and glass manufacturers
have already made good progress.
The hesitant response of other industries
may have to do with the fact that revenue
management is not something that can
be implemented overnight. It calls for
extensive know-how, thorough groundwork
and skilled personnel. It is no
accident that global airlines have been
honing their revenue management
systems for more than four decades,
becoming ever more efficient in the process.
Systematic revenue
management can
enhance revenues
by three to eight
percent. That’s an
attractive goal for
B2B companies, too.
DR. DANILO ZATTA
Partner, goetzpartners
WINNING THE RACE
UP TO 8%
HIGHER
REVENUES
WITH REVENUE MANAGEMENT
Genuine revenue management goes
beyond such minor adjustments, combining
dynamic pricing and capacity planning to
create a sophisticated pricing strategy for
MARKET
KNOW-HOW
CUSTOMER
SEGMENTATION
PRICING
STRATEGY
1 Kolisch, Rainer and Zatta, Danilo: Profit impact of revenue management in the process industry, Journal of Revenue and Pricing Management, April 2014
2 Kolisch, Rainer and Zatta, Danilo: Implementation of revenue management in the process industry of North America and Europe, Journal of Revenue and Pricing Management, February 2011