New research shows that almost all B2B media, information, events and services are under-priced. The survey of 614 different media products and services, principally in the US (57%) and Europe (33%), shows they were under-priced – on average – by 5.8% and that 59.9% were under-priced by 5%. Some 7% were under-priced by 10% or more.
The analysis was conducted during the two years ending April 2022 by Profisy, a London-based provider of pricing software.
It serves to show that B2B media companies are frequently pricing at something other than optimal levels for their own profitability. Such pricing power is not trivial because it may be a highly dependable proxy for critical information about companies including market strength, competitiveness, customer loyalty and barriers to switching. Ultimately, of course, it is also the antidote to inflation. The apparent pricing headroom may help to explain also why the valuations of so many large dynamic consumer tech companies have collapsed in recent months, while investor appetite for B2B companies has been growing. Inevitably, these average levels of under-pricing mean that some individual products and services are much more heavily under-priced.
It also implies, of course, that the companies themselves risk being under-valued in any M&A.
Profisy says: “These statistics are striking in a commercial landscape where many B2B business leaders privately voice concerns that their products are actually over-priced.” The Profisy’s methodology deliberately disregarded subjective factors and projected how far these B2B products can increase prices before risking a fall in demand.
Trade shows (less than 30% of the products in this study) have been adversely affected during the pandemic and its aftermath. But Profisy suggests that B2B companies are overwhelmingly defensive; very few of them even get close to testing the limits of their pricing power. They often fall a long way short.
Profisy is a London-based data and software business that uses AI to predict customer behaviour, set prices and improve retention. It specialises in B2B and covers the full range of business models (media, subscription information, workflow software, data and live events). It works with worldwide clients to optimise yield – and to answer the key question of what price their market will bear across each product and geography.
