Competition is part of all business, whether it is B2B or in the consumer market. The nature of B2B (fewer, larger value and often more complex purchases) means a good understanding of your competitors is vital. There are two ceilings on what you can charge: some percentage of the perceived value you deliver, or what someone else will charge to satisfy that customer need.
To prevent customers exploiting this in the tender process, you must assess competitor capabilities objectively in terms of their ability to provide the capabilities required for each project. It is an inexact science – so there is no reason to over-analyse, but to put yourself in your customer’s shoes and assess the relative merits of different suppliers. Only then can you determine what to do to swing the balance in your favour.
Being objective is tough; there is often a tendency to over-estimate the competitive position of others. After all, you know all about your own limitations and disadvantages, whereas you mainly see your competitors’ public face (all good) plus what your customers tell you (strangely, that’s all good, too). Retaining balance is hard, but vital as this can be very damaging as it leads to needless discounting.
If you think you have no competitors for your products and services, then you are kidding yourself. Even if you can demonstrate you have no obvious, directly equivalent competitors, you probably aren’t looking hard enough. Never forget, in the end, for the customer to do nothing is a competitive choice.
One sort of competition you don’t need is internal: if the customer goes with you, but decides to buy a cheaper option you have available, can you justify the incremental price of the alternative you would like to sell with incremental value?