Price < Willingness to Pay creates suspicion in B2B products.

Some thoughts on B2B Pricing gotchas.

  • Typically when the (Price of a product) < (The amount the customer is willing to pay for the value provided), the customer perceives it as a discount and transacts with you.
  • Butm in B2B use cases if the price of the product is lesser than what the customer perceives as value or is willing to pay, then it can have a counter effect of getting the users confused about the actual value proposition.
  • Typically this happens (imo) because a lot of B2B products are fairly complex and all the value propositions aren’t immediately experienced by the buyer. The buyer takes your word for a lot of it (e.g. we can maintain a 99.999% SLA or “we will provide you with priority support”).
  • So the combination of the complex product + the buyers inability to experience all the value propositions right away + the price of the product being lower than what they estimated the value to cost can raise significant doubts on whether the salesman is being truthful.
  • This is what I learnt during the early days of Shopify Plus, where the price of the product was siginificantly lower than competitors at the time who had large e-commerce contracts with enterprises.
  • This confusion is avoided if the price is perceived as a temporary discount or an offer, or it is made very clear as to what technological advantages you have that allow you to provide such a great value prop.