October 22nd 2010

Pricing survey indicates you are dropping prices, but for the right reasons? Part 1.

Pricing survey indicates you are dropping prices, but for the right reasons?  Part 1.

43% changed prices last year

43% Reduced prices last year in a recent pricing survey.  Of interest to note is that prices were dropped from 10% through 60% with the median amount 25%.    About 45%  of companies dropped prices more than once.

Discounting is common in the market.  Forrester tells us that 95% of clients do not pay the list price.

As long time  sales folks we have seen the numerous ways that “creative” salesmen can arrange a discount to get the order.  And there are people and companies that will not do business with you without a “better” deal.   In my Asian travels I have seen the relentless pressure and gaming used to get the  best price.   As consumers when we hear that the economy is in tough shape  one of our first thoughts is to believe we do not have to pay full price , that sellers are looking to make a deal.

Discounting is not a bad thing  if you are doing it for the right reasons. Some are

  • A market penetration/domination strategy with a definable end point
  • A response to an unique competitive situation
  • As part of a new product or new market entry strategy

It is a bad thing if you are discounting because:

  • There is gap between marketing and what salespeople need to demonstrate product value
  • There  are gaps between operations/development/customer service which cause customers pain ( ie missed deadlines- upgrades, etc.)
  • The salesforce lacks the tools, tactics and training to sell on value and not on price.

So if you are discounting your product , you must know why it is happening.   In today’s market, there are many powerful ways to raise, not discount prices. At Rocket Builders we train our clients on how to raise product value to get customer engagement, to pull customers through the sales process and to protect that value at closing negotiations when the buyer is looking for a discount.

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