Step 5 – Deal Analysis
Deal Analysis will start to give insight where there is over-discounting and under-discounting, how consistent or – more likely – inconsistent the discounting is. This is where most of the opportunities are.
This will also inform the List Price Positioning Strategy, List Price Plan and ….
Step 6 – Discounting Policy & Programs
The conclusions from the Deal Analysis should be taken forward to create/update the Discounting Policy & Programs.
In most organizations this involves establishing a rational, policy-based approach to discounting which allows Sales to focus on “selling the valueâ€.
Typically this will be a move away from a “You Gotta Haggle†strategy.
Additional discretionary discounting programs should be designed so that they are only given in exchange for something which helps your business achieve its goals.
Contractual discounts for channel partners should be designed to reflect the tasks that the partner is contracted to perform in reselling your product.
The policy should include bid escalation criteria, process & SLA (Service Level Agreement).
The Discounting Policy & Programs should be aligned with the List Price Positioning Strategy & List Price Plan.
Step 7 – Sales Comp
Sales Compensation should be designed in order to support the execution of the Discounting Policy & Programs and the attainment of the business plan.
Importantly this should not be left to Sales – or even worse, the GM or CEO – to design unilaterally. Sales Comp needs to be consistent with all the other elements of End-to-End Pricing.
Extract from “10 Steps to Creating End-to-End Pricing” in April 2016 edition of The Pricing Advisor, authored by Paul Charlton of The Pricing Factory®.
- The Pricing Advisor is the monthly publication of the Professional Pricing Society, The World’s Leading Association Dedicated to Pricing Management.
- This is the second article of Paul’s that the Professional Pricing Society has published. Read the paper in slideshow format …..
- Any questions, please contact [email protected]
