5 Drawbacks of B2B Discount Pricing

B2B discount pricing may require speciality. Extreme and frequent discounts affect the market’s perception and the value of goods and services. Because the end of the day, it harms the revenue of a company, especially in a B2B business. 

Because of this, many B2B companies think twice before putting a deal on their product. In a B2B business, a store owner sells products in large quantities. When a store owner offers frequent discounts on every product in a B2B business, there is no question that it will cause the store to lose money.

However, does that signify that we should avoid all forms of price reduction? The pricing strategy of B2B and B2C is different.

Customers may want frequent discounts in B2C sales as a sign that the goods are not worth the regular price. And this is a common practice. Both businesspersons and customers are used to it.

But in the case of B2B, it is different. B2B Discount pricing is a method that may help move out old stock towards the end of the month but also teaches customers to put off purchases until the next sale. In this article we will find out of these aspects.

How to Use Discounting Strategically to Grow Your B2B Sales

Frequently offering discounts is a problem in B2B sales. Discounts are a common tactic salespeople use to seal the deal. However, this practice needs to be revised in the long run. When a salesperson is quick to provide a reduction, the customer knows it is time to negotiate, and they will keep trying to lower the price even further.

On the other side, discount pricing can boost customers’ opinions of a product’s worth when implemented properly. When a luxury brand offers a rare sale, for instance, customers feel as though they are getting a steal on an expensive item.

When you can buy something that would typically be out of your price range, it gives you a nice feeling. Although this pricing method is more typical in business-to-consumer interactions, it is also becoming more widespread in business-to-business scenarios.

What are the Drawbacks of Proving eCommerce?

Providing discounts may sound beneficial, but that is only sometimes applicable. In the case of a B2B business offering the wrong discounts can be a big mistake. Here are some drawbacks a store owner can face if they offer a price cut without proper planning.

  1. Decrease Profit Margins
  2. Cut Down Brand Value
  3. Establishing a Sense of Buyer Superiority
  4. Create a Conflict Between the Regular Price and the Offer Price
  5. Can Create Unmanagable Situation

Drawback 1- Decrease Profit Margins

Profit margins for B2B companies suffer that offer eCommerce discount pricing, which is lower revenue per sale.

Businesses forego potential profits in favor of higher sales volumes in response to price cuts. It is crucial to weigh if the increase in sales volume makes up for the decrease in profitability, even though this strategy may attract price-conscious clients.

A lack of attention to this symmetry might undermine long-term growth prospects and lead to an unsustainable corporate strategy.

Drawback 2- Cut Down Brand Value

Offering price cuts regularly can be a negative aspect of an eCommerce store’s reputation. Customers may think of the company only regarding its low prices if they are constantly exposed to promotions.

This can lower the value consumers place on the brand and cause them to become less loyal to it. sustaining a solid brand identity and attracting customers who appreciate the distinctive traits and benefits supplied by the brand requires a careful balancing act between promotional pricing and sustaining brand value.

The brand value of a product is significant because, according to fitsmallbusiness, Consistency in branding can lead to a 20% rise in sales.

Drawback 3- Establishing a Sense of Buyer Superiority 

Customers may develop unrealistic expectations of their rights due to the frequent discount price offered by online retailers. Customers may mistakenly believe they deserve to buy products at a low price. 

And when a business understands that its customer base now becomes discount centric, then it has no other choice but to give discounts. Otherwise, he will lose his potential customers. If he plans to stop giving a discount, it will appear as an example of arrogance.

In such a situation, maintaining good customer relations and returning to average pricing might be challenging. Moreover, it also raises the risk of dropping customer loyalty and retention.

According to Multivu, Customers’ purchasing decisions are influenced by factors other than price only. Price was cited by 89% of respondents as the most crucial criterion. In comparison, brand awareness was at 45%.

Hence, the quality of a product also matters. It is okay to decrease the value of your product by offering unnecessary discounts.

Drawback 4- Create a Conflict Between Regular Price and Offer Price

The significant difference between total price and sale price is a source of conflict in the industry of eCommerce.

Customers who have already paid a lower price may be dissatisfied if forced to pay the total price. As a result, dissatisfaction harmed consumer relationships, and a slowdown in sales was a possible outcome.

To successfully manage this issue, it is necessary to communicate with customers and create a flexible deal for everyone. This step will help to match all the expectations of different types of customers.

Drawback 5 – Can Create Unmanagable Situation

It can be challenging for B2B companies to implement and manage discount pricing strategies for all business types.

For instance, a business person who sells hardware or different types of muffins. Both of them can not provide the same types of discounts to their customer because these products differ. For providing a suitable discount offer, the store owner can choose a discount like “Volume discount.”

Offering the wrong types of discount can cause revenue loss, a lack of consistency in the customer experience, and lower operational efficiency are all possible outcomes of poorly managed discount pricing.

To succeed in today’s more competitive business climate, it is essential to offer discounts with solid structures and procedures for handling these kinds of difficulties.

One more solution I can offer you is if you are running a B2B wholesale business at Shopify, you can use the bundle builder app for Shopify because bundles are a different form of discount. When a store owner sells something in a bundle, he may adjust the total price according to the price range.

Have a look at a storefront that is using a bundle builder app-

Bulk ordering in package MultiVariants

Here, a store owner sells products in two different packages, and he added a MOQ restriction as well. Now, he can adjust and change the pricing of his product whenever he wants. This bulk order app for Shopify is helping the store owner versatilely.

Bottom Line

Offering price cuts is one method to increase revenue and gain new clients. But there are several drawbacks to discounting that you should be aware of. Because offering a wrong discount.

Get MultiVariants from Shopify App Store