In Part 3 of the Pricing Transformation Series, Joanna Wells explores a growing pricing problem in B2B businesses: pricing structures that appear stable but behave very differently underneath the surface.
This episode examines how freight surcharges, discounts, rebates, and commercial exceptions gradually increase pricing complexity over time. It also explores the gap between pricing models and operational reality, and why pricing visibility, control, and customer trust are becoming harder to maintain.
TIME-STAMPED NOTES:
[01:03] The Problem of Pricing Stability Illusion
[01:29] The Pricing Problem Beneath the Surface
[03:17] The “Industrial Plumbing” of Pricing
[04:52] Operational Reality vs. The Pricing Model
[06:14] The Human Side: Trust and Fairness
[07:22] The Real Debate: Control and Visibility
The Problem of Pricing Stability Illusion
[00:00]So this week, Australia Post is going to increase fuel surcharges again for all its business customers. Thousands of businesses will be impacted. And the reason being is that freight and diesel costs are continuing to increase across Australia.
[00:19]And honestly, when I, when I read this I thought, this is basically what a lot of B2B businesses are dealing with right now. Everyone’s trying to protect margin while freight costs move and suppliers increase pricing. So businesses start introducing fuel surcharges, freight recovery fees, special customer deals, and usually every one of those decisions makes complete sense at the time.
[00:46]But just imagine over a few years, all these little commercial decisions start stacking on top of each other. I’m thinking one line I read really sums it all up. It’s from a logistics market report and it stood out to me:
[01:03] “Stable headline rates are masking a much more complex market beneath the surface”. And honestly, yes, that is basically modern B2B pricing in one sentence. Because most businesses still use and define their pricing in terms of fixed pricing, list-less pricing, net pricing, or contract pricing.
The Pricing Problem Beneath the Surface
[01:29] But really, when you actually look at what’s happening day-to-day, there are many moving parts like exceptions, rebates, tactical discounts, freight adjustments, off-matrix deals. So while the pricing structure might look fixed, stable from the outside, in reality, the commercial structure underneath is often anything but.
[01:54] Hello and welcome to Pricing College podcast. I’m Joanna Wells, I’m the founder and director of Taylor Wells Advisory, and we help businesses improve margin through better pricing strategy. And by that, I mean we fix how pricing actually works in practice, not just what the price is.
[02:14] And in this episode, we’re going to continue our pricing transformation series. But before I start, I just want to emphasise that this week I’m going to specifically talk about B2B trade industrial, wholesale manufacturing, and distribution pricing.
[02:32] Because pricing does behave very differently in these environments compared to retail and online marketplaces. In B2B, for instance, you know, pricing is negotiated, it’s often very relationship-driven, full of legacy and often buried operationally inside the business.
[02:51] Whereas in retail, pricing can be faster-moving, it’s more public, it’s more visible, and increasingly it’s driven by algorithms. So today, I really want to talk about how pricing and price flexibility is quietly creeping into B2B businesses in Australia over time and often really without anyone fully realising how far it’s gone.
The “Industrial Plumbing” of Pricing
[03:17] I think one of the biggest misconceptions in pricing is that businesses either have fixed pricing or dynamic pricing. Honestly, most B2B businesses sit somewhere in the middle. Because while the pricing structure itself may appear fixed, the behavior and the culture around pricing is often highly changeable.
[03:41] And over time, you know, commercial deals start to accumulate and exceptions become normal, tactical decisions pile up and temporary fixes become the norm. Actually, a lot of pricing structures and systems honestly remind me of old industrial plumbing.
[04:02] You know, like over the years pipes get added, valves get patched in, temporary fixes stay forever and layers build up over old layers until eventually, no one fully understands how the whole thing flows anymore. And pricing complexity often develops exactly the same way, not through one big strategy project, but slowly, one commercial decision at a time.
[04:29] And to be fair, most of these decisions really make a lot of sense. You know, maybe sales do need more flexibility with pricing, there could be a major customer that needs more support, or costs have suddenly increased like we’re all experiencing now and freight is just blowing out of control—all very, very, very reasonable.
Operational Reality vs. The Pricing Model Problem
[04:52] But eventually, businesses end up in this very strange situation where their pricing model says one thing, but the actual pricing behavior and culture says something completely different. And that’s usually where frustration starts.
[05:07] Peter Drucker said—and I often think about what he said during pricing transformations—and it’s basically something like: some businesses become incredibly efficient at managing complexity instead of stopping to ask whether the complexity still makes sense in the first place.
[05:27] And honestly, I think that happens in pricing all the time. Businesses build more rules, more approvals, more exceptions, more reporting, more controls, but very rarely do they stop and ask, should pricing actually be this complicated anymore?
[05:45] And this is also why I find the dynamic pricing debate in B2B fascinating. Because a lot of B2B businesses immediately say, “Dynamic pricing? That would never work here.”
[05:58] But if you actually step back and look at what’s happening on an operational level, many of them are already operating highly dynamic pricing systems, just unofficially and usually without much control or visibility.
The Human Side: Trust and Fairness
[06:14] So why do I think all of this matters? Well, it matters a lot because pricing isn’t just maths or systems or margin recovery. It’s also customer trust, employee trust, communication. It’s about perceived fairness.
[06:31] Which is why, you know, principle thinkers like Kahneman and Tversky found that people are willing to sacrifice economic gain to avoid pain or unfairness. And honestly, you can see that everywhere in pricing. The moment customers stop understanding how pricing works or why pricing differs or even whether they’re being treated fairly, trust starts to break down.
[06:58] A lot of businesses may think they have fixed pricing, but sometimes it’s a bit like saying you have like a strict household budget while quietly running six different credit cards in the background. The structure technically exists, but the actual culture and behavior of your teams tells you a completely different story.
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The Real Debate: Control and Visibility
[07:22] So personally, I don’t think the real debate is fixed pricing versus dynamic pricing. I think the deeper question is, do B2B businesses actually understand how pricing behaves commercially inside their organisation today?
[07:38] Because often, the pricing structure says one thing, the sales team and process says another, and realised pricing outcomes tell a completely different story again. So maybe the real question for leaders is this:
[07:54] Do we actually have fixed pricing, or have we simply lost control of how pricing actually works?
Because those are very different things. And honestly, I think this is one of the biggest reasons why pricing transformations become so difficult.
[08:12] Because a lot of businesses are trying to redesign pricing, but they’re doing so before they fully understand what’s already happening operationally underneath the surface. And usually, that gap stays hidden until margins tighten or customer trust weakens or even when commercial inconsistency becomes impossible to ignore.
[08:35] I’m Joanna Wells, founder and director of Taylor Wells Advisory. And if any part of this discussion feels a little too familiar, you’re definitely not alone.
[08:46] And next week, we’ll look at the same issue, but this time for retail, FMCG, and online marketplaces. Because when pricing starts moving in real-time, customers do start questioning whether the pricing actually reflects real value or whether it’s just opportunistic pricing.
[09:05] And that’s where trust starts becoming a very big issue and very quickly. Thank you for listening and I look forward to seeing you next week. Goodbye.
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