Why B2B Companies Struggle to Escape Price Competition—and What to Check Before Cutting Prices

Author: Daisuke Irikura (Representative Director, HUV DESIGN OFFICE Co., Ltd.)

What You Will Learn

• What else to check when a report says, “We lost on price”
• Six items to check before cutting prices, and the information to gather
• How to choose measures based on your findings

The Bottom Line: Verify the Price Difference and the Other Conditions

A price difference can itself be the reason a deal is lost. However, a report that simply says “the price was too high” does not tell you whether your price was uncompetitive for the same specifications and commercial terms, exceeded the budget limit, or reflected additional value that the customer did not recognize.

Before deciding to cut prices, check deal-level profitability, reasons for lost deals, alternatives considered, buying stakeholders, selection criteria, and supporting evidence. This article proposes these six items as a practical process for gathering the information needed to make a pricing decision. They provide a framework for reducing the risk of overlooking causes, not a diagnostic scale that guarantees an escape from price competition.

The overall approach to brand strategy is covered in this article. Here, we focus on deciding whether to lower the price or review other conditions for an individual quotation.

Price Is a Genuine Selection Criterion

OpenStax’s Principles of Marketing explains that B2B buyers consider quality, delivery, and price when searching for suppliers, and evaluate factors such as supply capacity, reputation, warranties, and price when selecting a supplier.[1]

There are therefore times when “we lost on price” should be taken at face value, and times when further checks are needed. Record the fact that the customer cited price, then establish what that price was compared against and how the other conditions were evaluated. It is also important not to replace the customer’s explanation with a salesperson’s assumption that “the real reason was something else.”

Six Items to Check Before Cutting Prices

1. Deal-Level Profitability: What Remains After a Price Cut?

For similar deals you have already won, check gross profit using revenue and cost of sales. For lost deals, compare profitability using the revenue and costs estimated when preparing the quotation. Be careful not to confuse actual results with estimates.

Also check the labor hours and additional expenses involved in custom support that are not included in cost of sales. Use consistent expense classifications and avoid deducting the same costs twice. Positive gross profit alone does not establish that the deal as a whole is sufficiently profitable.

Information to record: Current price, estimated costs, costs of additional support, profitability after a price cut, quantity, specifications, delivery schedule, and payment terms.

2. Reasons for Lost Deals: What Facts Have Been Confirmed?

Where possible, ask the customer why they made their decision. Use non-leading questions such as, “Did the price exceed your budget?”, “Was the price difference compared with another supplier the deciding factor?”, and “Were there any conditions other than price that led you not to select us?”

Record the customer’s explanation, the salesperson’s assumptions, and what remains unknown separately. If you cannot obtain a response, do not fill the gap with a presumed reason.

Information to record: The customer’s responses, the respondent’s role, the date of confirmation, and unverified points.

3. Alternatives Considered: Is the Comparison Like-for-Like?

Identify the option the customer actually chose, such as ordering from another supplier, handling the work in-house, or postponing the purchase. When comparing prices with another supplier, check whether you can make a like-for-like comparison of specifications, quantities, maintenance scope, delivery schedules, and payment terms.

If you cannot obtain information about a competitor’s quotation, do not treat its terms as established facts. Distinguish between knowing only the price difference and having also confirmed the scope of the offering.

Information to record: The alternative selected, conditions that can be compared, and items whose conditions are unknown.

4. Buying Stakeholders: Who Evaluated the Proposal, and Who Made the Decision?

OpenStax identifies roles in B2B buying such as users, influencers, buyers, and deciders. However, these roles are not always assigned to separate people; one person may perform several roles.[2]

Your contact’s assessment does not necessarily represent the final decision. In line with the customer’s procurement rules, establish who checked the specifications and budget, and what criteria ultimately informed the decision. Rather than treating a direct meeting with the decision-maker as the only path to success, also consider how to deliver the necessary materials through your contact.

Information to record: Stakeholders’ roles, explanatory materials required, and the decision-making process and timing.

5. Selection Criteria: What Differences Does the Customer Need?

Confirm both the minimum requirements and the criteria used to compare candidates. Even something you consider a strength may not, on its own, justify a price difference if the customer does not need it.

Rather than forcing non-price criteria into the discussion, investigate how your proposal was evaluated against the customer’s requirements.

Information to record: Mandatory requirements, comparison criteria, their relative priorities, and feedback obtained from the customer.

6. Supporting Evidence: Can the Proposal’s Claims Be Verified?

Review whether claims about quality, delivery, responsiveness, and other capabilities are explained through materials the customer can verify. Use information you actually hold and can disclose, such as inspection records, the scope of support, and maintenance terms.

When presenting past results, specify the relevant period and applicable conditions. Do not bolster claims about superiority over competitors or the benefits of implementation with figures that cannot be verified.

Information to record: Claims, corresponding materials, their scope of applicability, recipients, and additional questions from the customer.

Choose Measures Based on Your Findings

Consider the following measures based on the information gathered. If you identify multiple issues, you may need to address them in parallel.

• The price difference is the deciding factor under the same conditions: Review costs, specifications, quantities, and commercial terms, and verify profitability after a price cut.
• Delivery schedules or support arrangements do not meet requirements: Improve your delivery and support capabilities, or clarify the scope you can accommodate.
• Information needed for evaluation has not reached the right people: Review proposal timing, explanatory materials, and how you accommodate the customer’s decision-making process.
• Your strengths do not match the customer’s requirements: Reconsider the proposal or the markets and customers you target.
• Your differences or credibility are not getting across: Consider clarifying the reasons to choose your company, presenting supporting evidence, and explaining these consistently across customer touchpoints.

Brand-related issues are not limited to the last item. They also involve the choice of target customers, the value you promise, and your actual ability to deliver it. Measures that refine wording and presentation need to be considered in conjunction with operational improvements.

If you choose to cut prices, define the deals, conditions, and period to which the reduction will apply, as well as when it will be reviewed. Assess not only the number of deals won but also profitability and the support workload after the reduction before deciding whether to continue.

Summary

Use a report that “we lost on price” as a starting point to establish under what conditions the price difference became the deciding factor. There is no need to assume that either price or branding is the cause before you know what happened.

Start with a recently lost deal and write down what you know and what remains unverified across the six items. Use those findings to inform decisions about price cuts, changes to terms, improvements to delivery and support capabilities, and branding measures.

References

[1] OpenStax, Principles of Marketing, 4.4 Stages in the B2B Buying Process (evaluation criteria when searching for and selecting suppliers). Accessed September 28, 2026.

[2] OpenStax, Principles of Marketing, 4.2 Buyers and Buying Situations in a B2B Market (buying stakeholders’ roles and cases where roles overlap). Accessed September 28, 2026.

Related Articles

• How to Approach B2B Branding—The Serious Consequences of Misreading the Core Problem
• What Is Positioning?—Why Differentiation Alone Is Not Enough
• What Happens When Sales Depend on Individuals—The Fate of Companies That Have Not Put Their “Reasons to Be Chosen” into Words

If you would like to clarify what is driving price competition or which issues to prioritize, see HUV DESIGN OFFICE’s Services and Pricing.