Why Pricing Power Is THE Key to B2B Profitability - and What Gets You There

In my latest LinkedIn event on B2B Marketing Strategy, I talked a LOT about Revenue. It's the top goal that most businesses want to aim for with their marketing. (The other two goals should be Reputation and Resilience). But not all revenue is created equal. And not all of it is equally profitable.

Watch this video to hear me talk about revenue health and risk and the impact of Marketing on your revenue.

So, what is the MOST effective way to increase profit margin for the revenue in your business?

Charging more for your product or service.

That may seem like it's easier said than done, so let's take a closer look at what makes it possible.

Reputation Is the Factor That Enables Higher Pricing and More Profitable Revenue

If you have a known, trusted, differentiated and PROPERLY POSITIONED brand, you have the ability to charge a premium. This goes directly to the profitability piece in revenue.

Read more about why "Brand Positioning Is Everything ."

The fact is that the best and most effective way to increase your profitability is to increase your price.

(Note, this doesn't necessarily mean raising prices for existing customers. But with your future pipeline you have room to experiment).

Does the strength of your brand allow you to raise prices? If not, ask yourself what could be changed to improve your reputation.

Isn't Charging More a Scary Thing to Try?

It doesn't have to be.

In the B2B space, price sensitivity is not the same as it is in the B2C space. One reason is that the person making the purchasing decision is usually not having that money come out of their own personal bank account (even if it's the business owner making the decision). They're spending the company's money.

Of course, there ARE things they care a lot about, including not making a bad decision that will cost them their job or negatively impact their business. This is where reputation comes in.

When there's less price sensitivity, the things that people will pay more for are:

• Trust
• Authority
• Credibility

B2B buyers will pay more to know they're getting the right thing and feel confident that they're making the best decision.

Brand Positioning Is Vital for Profitability

The more your target market or your audience knows about your brand, and the more they trust your brand in comparison to your competitors, the more you can charge. That's good news if you've been investing marketing resources in strengthening your reputation.

Many companies just assume that they can't raise prices because of what a competitor is charging or because of other factors.

It's not necessarily true. And the more brand awareness and trust you build, the more you have wiggle room to raise your prices.

Take a look at this chart to understand this CRITICAL factor:

For a 1% increase in price you get a 10% increase in profitability.

NO OTHER TACTIC COMES CLOSE!

Cutting costs by 1% is only a 2% increase in profitability. And even compared to increasing sales volume, price change makes a bigger difference than selling more stuff.

Now here's my final nugget for today.

"The ability to increase prices doesn't come from Sales, it comes from Marketing." - Shasta Daisy McCarty

With that in mind, where are you putting most of your budget? Are you investing enough in marketing to grow the revenue, reputation, and resilience of your business?

If your revenue isn't growing fast enough, watch my conversation with Dacia Coffey on The Marketing Blender Show to find ways to fix it.

Finally, if you want to learn how The Marketing Blender can help you grow revenue, pick a time on my calendar to talk.

#revenuegrowth #b2bmarketing #b2bsales #branding #brandreputation #profitability