Thisisi2i price

PRICE

Practicing good pricing discipline

Pricing is easy isn’t it?

• We all think that we are experts but few of us are

• We think it’s macho but really it’s not

• Good sales people do not use price as a • Good sales people do not use price as a tool

• Pricing is a process which can be managed

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Setting the price list; consider the following

• Set a price to reflect the product’s value

– If there is an existing market this is set by the

price achieved by competitive products

• Know their list and net prices• Know their list and net prices

• Estimate their average prices

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There is usually a spread of prices in the market

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average price

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net price

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list price



– If there is an existing market this is set by the

price achieved by competitive products

– If there is no existing market this is set by the

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– If there is no existing market this is set by the

price of the nearest equivalent product with an

adjustment to reflect the relative value of the

new product



• Allow room for the sales team to negotiate; this is a cultural issue!

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• Make sure that the expected discounted

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• Make sure that the expected discounted price delivers intended profitability




• Make sure that the expected discounted

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• Make sure that the expected discounted price delivers intended profitability

• And ensure that it is consistent with growth and volume objectives




• Make sure that the expected discounted • Make sure that the expected discounted price delivers intended profitability

• And ensure that it is consistent with growth and volume objectives

• Control prices centrally

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the salesperson: price freedom

• Limit the salesperson’s price freedom

– Train him or her to use it sparingly

– Referring back is not a sign of weakness it’s a

sign of how carefully we manage price

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sign of how carefully we manage price

– Don’t tell the sales team what our costs are or

what our profitability is; it’s their job to secure

sales in line with our price policy

– Don’t allow a sales person to discount to

below the expected average price

Don’t let him or her reduce the average price

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average price


net price

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list price

maximum discount

the salesperson: discounts + commissions

• The best sales teams are incentivised and incentives should be related to price

– A sales person should get maximum

commission if he or she sells at list price


commission if he or she sells at list price

• If sales people are allowed to discount their commission should reduce

– There should be a residual commission if the

maximum discount is given

• If a salesperson is allowed to exceed this maximum the residual commission remains

In front of the customer: setting up the negotiation

• Focus on non-price arguments– Make sure the sales person can spin an

credible and honest cost of ownership story

– Don’t forget the value of service


In front of the customer: setting up the negotiation

• Focus on non-price arguments

• Think about the buyer; if he or she needs a discount be prepared to give one

• Don’t dignify competitor prices by


• Don’t dignify competitor prices by discussing them

• But listen to the customer; be alert to constructive guidance

In front of the customer: doing the deal

• Everything has a value; give everything a price in the quote and on the order

• Make concessions on lower priced items where the % can be bigger


where the % can be bigger

• Or inflate the quote so that the net price is minimally discounted

• Be mean with discounts: if we need to give 4.8% give 4.8% and not 5%

• Be vary wary about setting a new floor

Be very very wary of setting a new low

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average pricefloor price


net price

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list price

maximum discount

In front of the customer: major accounts + OEMs

• There are no standard discounts– OEMs may get a discount because our selling

expenses are lower

– Major accounts may get a discount because of their market leverage


of their market leverage

• In both cases the discount gets negotiated and reflects the importance of the account to us– It is specific to the account

In front of the customer: sometimes we don’t win

• Don’t expect to win every order

– But make sure that we win our fair share

– And know what the fair share is

• When we loose understand why we’ve lost


• When we loose understand why we’ve lost and update the win:loss ratio

– But if we win celebrate!

• Don’t leave a low price on the table

Finally: manage it

• Never go soft on price

• Be brutal: net all discounts off the printer price

• Measure price performance



• And remember: the salesperson is unique in the company in being the one person responsible for everyone else’s salary

Finally: manage it

• Never go soft on price

• Be brutal: net all discounts off the printer price




• And remember: the salesperson is unique in the company in being the one person responsible for everyone else’s salary

• But he or she can blow it all with one lousy bit of pricing!

• [email protected]

• +44 1223 236232 or +44 7739 758859i2i-management

http://uk.linkedin.com/in/jdavidjenkins

Contact me!

http://uk.linkedin.com/in/jdavidjenkins

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© David Jenkins and i2i-management.com; 2010

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