Industrials B2B Pricing

Ensuring your products and services are appropriately priced to capture value from your customers while ensuring that you meet their needs and retain their business are critical across the industrials landscape. Finding the right pricing strategy and the right model to base pricing on, and establishing packaging, price level, discounting structure and governance are all critical to realizing the best value for existing and new products across the industrials sector.

Critically, every business in every industry has different challenges, ranging from rising above cost-plus commodity pricing to monetizing value-add services, and from consistently pricing complex stock keeping unit (SKU) catalogs to thousands of accounts to ensuring the sales team is selling value and working within a broader pricing strategy. When L.E.K. Consulting supports a client’s pricing strategy, we do so by melding deep commercial and sector expertise in your market and with your customers, a rich best-in-class pricing toolkit and a pragmatic eye to delivering value quickly.

We have end-to-end pricing capabilities, supporting clients in building and executing a high-impact pricing strategy. Our deep knowledge in our subsectors, such as building and construction, packaging, chemicals and materials, automotive and mobility, industrial distribution, energy and environment, agribusiness and more means integration of real-time understanding of customer, value-chain and competitive dynamics to quickly realize value through price.

Our approach

Industrials businesses face myriad complex pricing questions:

• Which pricing strategy and model will create the most long-term value for our business?
• How can we optimize existing pricing models and levels to expand revenue and margins without compromising on growth?
• How should I price my new product or service line to best achieve success not only for the new product but also for the company?
• What is the value-maximizing pricing approach, based on local supply-and-demand dynamics and cost to serve?
• How do we execute value-based pricing in commodity-heavy supply chains?
• How should pricing be handled for value-add services or complex SKUs?
• Which discounting/promotional strategy will create the most value for my business?  
• How should pricing execution be managed to maximize realized contribution?
• How should the pricing strategy be implemented to assure success and impact on my business?
• How can pricing software and artificial intelligence models be used to improve my pricing outcomes?
• Which key performance indicators, models or tools will best allow me to track the impact of the defined strategy and make changes along the way?

The answers to these questions depend highly on context, industry structure and the relationship between you and your customer, be it the end user or another player in the value chain. Any successful pricing strategy needs to be deeply tied to this industry context and customer understanding, which is why our industrials pricing leadership is deeply integrated with our industry expertise through execution. It is also critical to consider pricing impacts up and down the value chain and implications on end demand, as well as competition and substitution across product categories to fully understand the pricing opportunity and permission space.

Rather than a theoretical exercise, our pricing strategies and recommendations are designed to be actionable. An effective pricing strategy is never complete but is a continuous process that requires ongoing refinement and optimization as markets and customers evolve. We help our clients build their internal pricing muscles so they have the capabilities and processes in place to react.

Our capabilities

Our capabilities span the full breadth of pricing needs for industrials businesses: from broad strategic studies that redefine a company’s pricing models, to focused assessments of price levels and channel strategy, to operational support in building new price functions and redesigning pricing systems and sales processes.

Client successes

We have deep experience in providing clients with pricing strategies that improved their profitability.

• A leading manufacturer of commodity chemicals servicing the mining sector wanted to optimize its pricing strategy as it was suffering from participating in a market characterized by overcapacity and irrational competitors. We developed a pricing model that produced the optimal price points per market and recommended account-specific actions for the client to take to realize significant returns. We developed a pricing strategy for the client, where the financial impact was estimated at more than $80 million in incremental annual revenues in five years.
• An aviation maintenance, repair and overhaul provider was looking to focus its near-term efforts on creating value through pricing optimization. We conducted rigorous SKU- and customer-level financial analysis to identify pricing upsides within its core business units, and explored, validated and modeled upsides from additional pricing opportunities, such as product bundles or accelerated turnaround times. We worked with the client to develop a superior and sustainable pricing strategy and optimize its approach to contracts and negotiations.
• A construction management software provider serving general contractors and the trades was looking to optimize its pricing and packaging approach in order to win new customers, reduce customer churn and drive upsell through better matching of the right packaging to the right customer. We identified ideal feature packages for different customer segments and priced them according to customer willingness to pay, preferred features and market dynamics, as well as identified potential product bundles and pricing tiers to balance diverse customer preferences. We worked with the client to develop its pricing and packaging strategy, enabling it to significantly increase revenue and profitability.