Sales Modeling

Importance of a well-structured price list can not be overstated.  Your price list consists of products and prices.  Therefore, discounting and related approval processes will be governed by your price list.  Smart companies have circumvented entire discounting impasses and ultimate fiascoes by building discounts into the price and messaging customers to the extent “discounts have already been applied.”  There can of course be some wiggle room here, but suffice to say smart companies have adopted derivatives of this approach to significantly reduce cycles related to contract modifications and time-consuming sales management approval cycles.

Consistency is key, as well.  Your customers will talk and if they discover inconsistencies it can be detrimental.  A related challenge is managing pricing across multiple channels.  One thing your customers will greatly appreciate and therefore correlates to loyalty is an easy to understand and easy to administer price list.  Given these times of tight budget controls any surprises related to price and subsequent investment are frowned upon.

An often overlooked aspect of pricing is how easy it is to explain for the sales person.  If your product mix is bundled, it is much easier.  However, if it is unbundled there is potential for upsell, later.  There are trade-offs to each approach.  Keep in mind a funny factoid about price lists: the more products you have on your price list the more you will sell.

Again, smart companies know this and often rename the same product multiple times.  For example, they may list the same product under multiple vertical solution-oriented names.  With today’s economy, many customers are contractually avoiding anything that smacks of multi-year commitment without language that permits early exit without penalty.  Therefore, your pricing should potentially reflect this current trend.