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In Matters of Pricing, Stand Like a Rock
Blog / For Sales Pros / Jun 14, 2023 / Posted by Brian Sullivan / 63

In Matters of Pricing, Stand Like a Rock


In the global sales community, the consensus seems to be that things are much better than in the early days of post-COVID but that deals seem to take longer and require more work to cross the finish line a winner. But the longer that pursuits go, fear and anxiety can overwhelm good business sense and drive changes in reasoned strategy shifts in efforts to increase the likelihood of success. Desperation is a harsh task-master that motivates many selling organizations to cut prices and abandon logical pricing strategies in the interest of winning. Winning at any cost. Emotion crushes reason. Need trumps sense.

I love the Thomas Jefferson quote – “In matters of style, swim with the current. In matters of principle, stand like a rock”. Let’s paraphrase it, though, for the selling dilemma many of us now face – “In matters of pricing, stand like a rock”. Of course, selling organizations strategically utilize flexibility in pricing on major pursuits. Room is often left in margins for “sharpening the pencil”. The key word, though, is “strategically”.

Abandoning planned pricing schemes in pursuits by cutting margins surrenders to the fear that can cause negative consequences to reverberate through selling organizations. Think about it. Credibly pursuing deals involves significant investments. Consider a selling organization’s people, the human assets whose time is precious. When people with limited time are assigned to pursuits, their talents are often unavailable to other organizational initiatives. Yes, pursuit investments are huge, but the pain is much more magnified if prices end up being cut. For the healthy revenues that typically offset pursuit costs are cut off at the knees. Opportunity qualification, therefore, is critical. As is being true to your pricing strategy. Let the competition lower their standards. In matters of pricing, stand like a rock.

The consequences of “buying the business” by cutting prices are long-lasting. Stable customers can take advantage of the situation by making bulk purchases to stockpile your products, killing your future revenues at better margins. Lowering prices can also establish client expectations that can be very, very difficult to change. Devalued brands often stay devalued. And in the “be careful what you wish for” category, bidding low often results in lukewarm victories that can burden your organization with financially untenable contracts. Years of bloody margins can cripple organizations in both the short and long-term. And if you join in the unsavory price battles with your competitors, beware the race to the bottom. You just might win.

Outside of diligent opportunity qualification, what can you do to increase your chances of winning business without giving away the store? Think creativity. What about alternative payment terms or the bundling of offerings? How about other products/services to be delivered concurrently or in the future to lower your expenses? Of course, having a comprehensive understanding of your account’s pains is mandatory. How about co-bidding with partners to create unique benefits for accounts in need? Or adding consulting services to a proposal to differentiate your offering?

Driving creativity to win. It can be done. Consider the classic story of the Xerox 914 Copier, introduced in 1959. The new machine was predicted, very simply, to change the future of printing. But even with its ground-breaking technology that delivered clean, crisp copies on plain paper for the first time ever, problems loomed. With all the efforts of Xerox’s amazing sales force, prospects balked at paying $30,000 for 700 lb. machines. Initial sales were very, very slow in coming. Enter creativity, in pricing, no less. Drop the price? Far from it.  Xerox concocted a strategy that overcame the price objection. How? They stopped selling 914’s. Stopped selling them and began leasing them, a seismic shift in pricing strategy that produced historic success. A famous Fortune article would later state “the 914 is the most successful American product in history measured by ROI”. For thousands of new clients signed up for the reasonably-priced monthly $95 lease, which included 2,000 free copies. And Xerox revenues skyrocketed. But, hands-down, the true growth accelerator was the creative pricing strategy and its 4-cent per copy charge above the monthly allowance. For Xerox clearly understood their prospects’ pains and made a calculated bet on human nature. They bet that people would quickly abandon the mess of coated paper and carbons for the convenience and cleanliness of plain bond paper. And they were right. Customers blew past their monthly 2,000 copy allowances and kept right on copying. In fact, the average customer copied more than ten times those allowances every month, with each additional copy generating for Xerox that 4-cent charge. Do the math!

In two years, the amazing pricing strategy tripled Xerox’s revenues as customers somehow found room for 10,000 of those 700 lb. machines. Joe Wilson, legendary Xerox VP of Sales, called the pricing change “the best decision we ever made”. And revenue growth continued at an annual clip of over 40%, as Xerox surpassed the $1 billion mark in 1968.

So, pick the right deals to pursue – those you’re most likely to win. And make sure you understand your prospect accounts nothing short of intimately, remembering Thomas Jefferson’s sage guidance as you proceed. Then copy Xerox and make creativity your competitive advantage.

About Author

Brian Sullivan is a best-selling author, consultant, and enterprise selling expert. He spent eight years at Sandler Training, developing and growing the Sandler Enterprise Selling Program on a worldwide basis. Prior to Sandler, Brian was in sales, sales management, and P&L management positions with The Capgemini Group for thirty years.

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