Pricing Strategies to Maximize Customer Lifetime Value

The Professional Pricing Society recently hosted an insightful webinar on Pricing Strategies to Maximize Customer Lifetime Value, featuring Joshua Bardell, Principal Strategic Consultant at PROS, and John Bruno, Vice President of Strategy at PROS.

The discussion focused on how businesses can evolve their pricing strategies to shift from short-term transactions to long-term customer relationships—ensuring sustainable revenue growth in an increasingly digital and dynamic marketplace.

In a world where customer expectations are rapidly changing, pricing plays a crucial role in building trust, driving retention, and increasing revenue per customer. This blog highlights the key takeaways from the webinar and practical steps businesses can take to optimize their pricing approach.

The Business Impact of Pricing Strategies

Pricing is more than just setting numbers—it’s about fostering trust, improving customer relationships, and driving long-term value.

Pricing is often viewed as a straightforward function—set a price, sell the product, and generate revenue. However, poor pricing decisions can have long-term consequences, conditioning customers to expect discounts, undermining profitability, and even leading to business failure.

Several well-known companies have suffered due to ineffective pricing strategies:

• Bed Bath & Beyond: Built its brand around deep discounts and couponing, ultimately training customers to wait for promotions instead of buying at full price—leading to revenue decline and eventual bankruptcy.
• Sears & Circuit City: Failed to adapt to digital commerce, relying on outdated pricing and sales models while competitors like Amazon and Best Buy leveraged dynamic pricing and personalized recommendations.
• Netflix: Once a disruptor itself, Netflix is now facing its own pricing challenges. Frequent price hikes have led to customer backlash and rising churn rates, as consumers find alternatives in a crowded streaming market.

These examples highlight the importance of data-driven pricing strategies that align with customer expectations, market trends, and long-term profitability.

The Digital Shift & Changing Customer Expectations

Over the past decade, digital transformation has revolutionized how businesses price, sell, and deliver products. What was once a face-to-face negotiation process is now increasingly being handled through eCommerce, self-service portals, and AI-driven recommendations.

The new generation of B2B buyers—millennials and Gen Z—grew up with digital-first experiences and expect the same convenience in their professional purchasing decisions.

The Expectation Gap & The Need for Speed

Many B2B companies lag in offering seamless digital pricing and purchasing experiences. When buyers can’t access instant, transparent pricing, they turn to competitors who offer faster, more intuitive purchasing options.

In fact, speed is critical in digital pricing. A study by PROS¹ show that:

• 48% of buyers are willing to pay 5% more for instant pricing
• Delays in online pricing led to cart abandonment and lost sales
• Companies that automate and streamline pricing processes can capture more revenue

Businesses must optimize their pricing engines to deliver accurate, real-time pricing across multiple sales channels.

The Role of Trust in Pricing

In a digital economy where customers can quickly and easily compare prices, trust is a critical factor and growth multiplier when it comes to influencing long-term customer relationships.

A study from Forrester Research² show that trust directly impacts business outcomes:

• 85% of customers are likely to recommend a company they trust.
• 83% of customers are likely to remain loyal to a brand they trust.
• 74% of customers are likely to buy additional products from a trusted company.
• 66% of customers are likely to pay a premium for a trusted brand.

How can businesses build trust?

• Consistency: Customers should see fair and predictable pricing across all channels.
• Transparency: Clearly communicate how pricing is structured—especially for volume discounts, rebates, and dynamic pricing.
• Personalization: Use data to tailor prices based on customer history, loyalty, and needs rather than applying generic discounts.

Building trust-based pricing strategies ensures customers continue to buy from you rather than shopping around for a cheaper deal. You can read more about Responsible AI for pricing in this blog by Craig Zawada and Dr. Michael Wu.

So, what are actionable steps your company can take today to embrace AI-powered pricing and drive customer lifetime value?

3 Pricing Strategies to Drive Customer Lifetime Value

As businesses strive to increase customer lifetime value (CLV), pricing strategies must evolve beyond one-time transactions. Companies that prioritize long-term relationships over short-term sales can create sustainable revenue growth, customer loyalty, and a competitive edge.

A core shift in modern pricing is moving from single purchases to ongoing revenue streams. This approach ensures repeat business, increases customer retention, and maximizes revenue per customer over time.

Below, we explore three key pricing strategies that help businesses achieve greater customer lifetime value:

1. Finding and Implementing Recurring Revenue Models
2. Leveraging Subscription-Based Pricing
3. Incentivizing Growth Through Rebates

Each of these strategies strengthens customer engagement, stabilizes revenue, and optimizes pricing to maximize profitability.

1. Finding and Implementing Recurring Revenue Models

One of the most effective ways to improve customer lifetime value is through recurring revenue models, which encourage repeat business without requiring customers to actively repurchase each time. Unlike traditional pricing structures that rely on individual transactions, recurring revenue models provide a steady, predictable income stream and help businesses develop deeper customer relationships. This model is especially beneficial in industries where customers frequently reorder the same products or services, such as manufacturing, software, and distribution.

A great example of this approach is the rise of Equipment-as-a-Service (EaaS) in the industrial sector. Instead of selling expensive equipment as a one-time purchase, many manufacturers are shifting to a model where businesses pay a monthly or annual fee for ongoing access, maintenance, and upgrades. A medical equipment manufacturer, for instance, might lease diagnostic machines while also providing a steady supply of consumables and service support. This shift ensures that customers remain engaged with the company rather than shopping around for replacement parts or service providers.

For companies considering a transition to recurring revenue, the key is to identify which products or services naturally lend themselves to repeat purchases. Auto-replenishment programs, long-term service agreements, and customized pricing contracts can all help businesses secure ongoing revenue while enhancing customer loyalty.

2. Leveraging Subscription-Based Pricing

Subscription-based pricing has exploded in popularity across industries, from entertainment and software to consumer goods and industrial services. The fundamental appeal of subscriptions is that they allow customers to pay for ongoing access rather than owning a product outright. This shift has proven highly effective in fostering long-term relationships, as businesses provide continuous value instead of just a one-time purchase.

In the B2B space, companies are leveraging subscriptions in new and innovative ways. For example, many manufacturers now offer automated replenishment services for essential supplies, ensuring that customers receive regular shipments without having to manually reorder. A laboratory equipment provider might charge a monthly fee to ensure hospitals and research facilities receive a consistent supply of testing materials, creating both convenience for the customer and predictable revenue for the business.

The success of subscription pricing lies in its ability to increase customer retention and lifetime value by embedding a company’s products or services into a customer’s daily operations. Businesses looking to implement subscription models should consider offering tiered pricing, where customers can choose between different levels of service, as well as incentives like discounts for long-term commitments.

Beyond increasing revenue, subscription models also provide valuable data on customer usage patterns, allowing companies to optimize their offerings and personalize their pricing based on individual needs. This deeper level of engagement helps businesses create a stickier, more loyal customer base that is less likely to switch to competitors.

3. Incentivizing Growth Through Rebates

While discounts are a common tool for attracting customers, they often erode profit margins and condition buyers to expect lower prices. A more strategic approach is rebate management, which provide customers with financial incentives after they meet certain purchasing milestones. Unlike traditional discounts, which immediately lower the price of a product, rebates encourage customers to buy more over time in order to receive a reward, ultimately increasing their total spending.

Rebates can take several forms, depending on the business’s goals. Volume-based rebates reward customers for purchasing a certain quantity of goods, ensuring higher order values. Loyalty-based rebates provide financial incentives for repeat purchases, reinforcing the relationship between the customer and the business. Growth-based rebates, on the other hand, encourage customers to gradually increase their purchase amounts by offering larger rewards as they spend more.

A great example of rebates in action is seen in the construction materials industry, where suppliers often provide tiered rebates based on purchase volume. A contractor who increases their quarterly spending by 10% might receive an additional 3% rebate, encouraging them to consistently buy more from the same supplier rather than seeking out alternative vendors. This type of pricing strategy not only locks in customer loyalty but also helps businesses boost their revenue without having to lower prices upfront.

For rebates to be effective, they must be easy to track and redeem. Customers should have a clear understanding of the incentives available to them and be able to see their progress toward reaching rebate thresholds. Additionally, businesses must align rebate programs with their overall pricing strategy to ensure they drive profitability rather than simply reducing prices.

Final Thoughts

Pricing isn’t just about numbers—it’s about relationships, trust, and long-term success. By leveraging AI, dynamic pricing, and customer-centric models, businesses can create pricing strategies that drive sustainable growth and maximize customer lifetime value.

Looking for more insights? Check out PROS Insights and Research hub at pros.com/insights-research.

¹ – PROS, Pricing is Key to Digital Selling Maturity ² – Forrester Research, The State of Global Business Buyer Trust in 2024