Successful companies in B2B tend to adjust their prices based on factors such as production costs, competitor pricing, and supply and demand. Dynamic pricing is a pricing strategy in which businesses adjust their prices for products or services based on current market situations.
Practitioners in B2B also refer to dynamic pricing as surge pricing, demand pricing, or time-based pricing. It relies on advanced B2B pricing analytics.
Industries Using Dynamic Pricing
Dynamic pricing is a common practice in industries such as retail, travel, hospitality, electricity, entertainment, and public transport. It is usually implemented using B2B pricing analytics software.
Due to the surge of e-commerce, it is becoming more accepted in manufacturing and industrial distribution as well. Dynamic pricing is not without controversy. Critics argue that dynamic pricing, particularly in the Business-to-Consumer field, might be a form of price gouging — when a seller spikes prices of services, goods, or commodities to an unreasonable amount.
What is B2B Dynamic Pricing and How to Implement It?
What is B2B dynamic pricing and how to implement it in your company? Why does dynamic pricing present an opportunity as well as a challenge in B2B? How exactly can pricing analytics software help you?
Let’s discuss these points in detail.
Why Dynamic Pricing is Becoming More Relevant in B2B
Setting the price right has always had a more significant impact on profits than reducing sales costs or increasing volumes. Especially when the average margin of the most significant industrial distributors is as low as 1%, while manufacturers can earn ten times as much.
Furthermore, customers and vendors nowadays are increasingly using e-commerce in B2B, which makes prices more transparent and further erodes margins. This trend will only accelerate, now that Amazon has entered a €4.00 Trillion American B2B market.
Distributors of IT, industrial, and medical supplies are facing growing pressure from Amazon Business, which exceeded €10 billion in annual revenues three years after its launch. One leading American industrial distributor, W.W. Grainger, was quick to slash prices following Amazon’s incursion into its space.
Moreover, it is not just pricing transparency that makes competition harder—it is dynamic pricing itself. Amazon is a company built on data and can manage prices dynamically. This fact alone raised the bar for every B2B distributor to price proactively and to invest in pricing analytics.
If your company is still not using a dynamic pricing strategy, do not despair. Recent research shows that, in the USA, less than one in five B2B companies price dynamically. Market leadership will come for those who start first.
How to Implement Dynamic Pricing in Your Company
Implementing a dynamic pricing strategy in B2B represents a sub-strategy in a general pricing strategy. Approaches differ from one industry to another. However, there are some steps sales executives can take to successfully roll out a dynamic-pricing strategy.
1. Assess the Business Case
The first step in a dynamic-pricing strategy involves a general assessment of the business case. Executives can identify the potential impact of pricing services and products dynamically to create a strong business case.
Postpone discussions about IT, software, or data until you have drafted a business case first.
Dynamic pricing is a business solution, not a new IT tool. Research from Bain shows that if a company is not actively managing prices, it is losing 2 to 4% in operating profit every year.
Some pricing analytics software can help estimate the impact of dynamic pricing for your company.
2. Build the Right Team
Parallel to assessing the case, put together an expert team to lead the project and work on mind-setting. Change is critical. Legacy software won’t impede your success with dynamic pricing; legacy thinking will.
3. Start with a Pilot Project
Find a partner with a dynamic pricing solution. An effective approach is to start with a pilot project. Companies with a bias for action perform better, learn faster, and avoid risks. Gather as many insights as possible from the pilot and improve the long-term assessment.
Pricing analytics software helps successful companies capture value by enabling precise and predictive pricing strategies. It also makes salespeople more confident during negotiations.
4. Integrate People, Process, and Tools
Successful dynamic pricing is the result of people, processes, and software tools.
- Improving a price strategy means setting an optimal price for each customer and product.
- People and their skills are a critical element in a dynamic pricing strategy.
- Analytical skills, openness to technology, context-awareness, and communication are all important.
- Matching employees with the right pricing software determines the customer experience.
If pricing software is the father of your customer experience, processes are the mother. Companies must also focus on how employees will work with the software.
Summary: What is Dynamic Pricing in B2B Sales and How to Implement It
- All B2B companies set prices dynamically, some within years, some within minutes.
- Salespeople’s confidence and response time significantly affect dynamic pricing outcomes.
- The success of dynamic pricing depends on salespeople, process, and software tools.
- Modern pricing analytics software predicts prices and reduces pricing costs.
- The first step is to assess your business case, then create a proof-of-concept using B2B pricing software.
- Start small and start soon. Find a solution partner and select an internal project owner.
Case Study: Medical Technology Company
A medical-technology company struggled to adapt to changing market dynamics. Its traditional sales model was under threat from increased competition, and hospitals demanded better pricing.
Leaders realized that deploying a system enabling real-time price adjustments could improve performance. However, they faced challenges like unclean data, lack of competitive data, and mistrust from sales teams due to previous “theoretical” pricing tools.
By addressing the people side—explaining how dynamic pricing works and involving the sales team early—they saw major improvements.
This led to:
- 4–8% margin increase
- 5% revenue growth
- Higher sales team engagement
Other companies following a similar approach have raised prices by up to 60% without losing significant volume.
Dynamic-pricing organizations focus less on volume and more on value.
The Real Benefits of Dynamic Pricing
Digital technologies and platforms are disrupting B2B sales models. Fortunately, they also enable dynamic pricing, which brings major benefits when implemented correctly.
Dynamic pricing helps companies:
- Understand and predict when to raise or lower prices.
- Improve decision-making speed and precision.
- Score deals against peer groups and factor in strategy, deal size, and product mix.
- Provide granular insights to enhance negotiations.
It’s also self-reinforcing—as sales teams test and refine pricing, they improve system accuracy and uncover new insights.
A chemicals-distribution company reduced deal-processing times from weeks to 1–2 days by using integrated dynamic-pricing and sales tools.
Building Out Your Dynamic-Pricing Engine
Before building anything, companies need clarity on goals. The choice of tools depends on business nature and strategy (margin or profit-share targets).
Analytics: The Foundation of Dynamic Pricing
Analytics form the base of any dynamic-pricing capability. There’s no single algorithm—each business needs a custom pricing engine aligned with transaction complexity.
- Statistical clustering groups products with similar pricing behavior.
- Value pricing uses customer interviews and benefit calculations.
- AI and machine learning deliver insights even from small datasets.
- Self-learning algorithms update prices based on customer behavior and willingness to pay.
Top companies include performance management layers to track metrics like price changes, magnitude, and revenue impact.
People: Changing Mindsets and Building Capabilities
Having a good pricing engine won’t work without mindset change. If salespeople believe lower prices mean more deals, they may resist recommendations.
Involve the sales team early in tool development. Ensure transparency and provide rationale for every suggestion. Align incentives with value creation, not volume.
Demonstrating quick wins through pilot projects helps gain confidence and secure more investment.
A chemical company achieved an additional $60 million in annual EBITDA by combining new pricing systems with intensive salesforce training.
Process: Organizational and Procedural Support
Dynamic pricing requires a dedicated pricing unit, either local or global, including:
- A pricing office to maintain engines, monitor prices, and advise management.
- Standardized pricing processes from market intelligence to granular recommendations.
- Pricing performance management with clear dashboards and regular performance reviews.
How to Get Started with Dynamic Pricing
Follow these five key steps:
- Identify potential impact and create a strong business case with top management commitment.
- Treat dynamic pricing as a business solution, not just an IT project.
- Focus on mindset change and realign incentives early.
- Deploy fast – use a minimum viable product and improve quickly.
- Build a strong talent mix, including data scientists and industry experts.
Final Thoughts
Dynamic pricing in B2B is not just a trend—it’s a transformation. Businesses that embrace data-driven, adaptive pricing models backed by analytics and human insight will be the ones to thrive in today’s competitive digital marketplace.
