Improve Your Average Sales PriceRead time: 4 minutes
If your company doesn’t take control of pricing, two things are bound to happen.
- You’ll leave money on the table
- Sales will create a race to the bottom
You want to make sure your pricing isn’t just competitive for your customers, but beneficial for YOU.
That can’t happen when your salespeople are slinging discounts like it’s the Wild West and nobody knows how to sell at full cost (or what full cost even is).
Nailing down these four pricing processes will elevate your business, brand, close rates, and profitability.
One: Declare an Owner Outside of Sales
The quickest way to increase your average sale value is to decide who is in charge of setting prices – and it can’t be anyone in Sales.
Why can’t sales take ownership of pricing?
Sales is incentivized to sell. If they own pricing, the easiest way to close a deal is to cut discounts until they get a “yes”.
After all, some commission is better than none.
When discounting isn’t kept in check, you end up:
- In a race to the bottom with the competition
- Devaluing your business and product
- Increasing churn rates
In 2018, ProfitWell did a study on the long-term effects of excessive discounting for SaaS and recurring revenue companies.
Unless you have incredible scale like Amazon or Walmart, winning by discounting just doesn’t work.
So who should take ownership of pricing if not Sales?
We suggest letting the finance department take the lead along with a committee of representatives from different areas such as Product, Marketing, and Sales.
This way, voices throughout the business can be heard, but there are no personal biases affecting the final decision.
Two: Set Guardrails
Now it’s time to agree on some rules.
Each product should have a set price decided by your pricing committee. Any discounts or changes made to pricing should be approved by a group leader before being offered to a customer.
You might also decide to set limited parameters for special discounts, ensuring that certain criteria must be met before the discount can be offered or approved.
For example, your pricing committee might decide that discounts up to 10% are ok and don’t need approval. But discounts up to 25% need VP approval, and above that, CFO approval.
Three: Focus and Refine
Targeting the right customers with the right offer is another great way to make more money from each deal.
Your salespeople should be focusing on selling to your Ideal Customer Profile, because:
- These customers have the money to spend on your solution
- They’re feeling the pain of their problem more than others
- They’re the best product-market fit
Consider whether you need to adjust your offer to fit the needs of your ICP. What kinds of bundles can your salespeople put together to sweeten the deal without eating into your margins?
Four: Communicate, Communicate, Communicate
Your pricing processes, rules, ICP, and bundled offers should all be clearly communicated to your sales team and easily accessible to reference.
Your marketing materials should also support these processes, ensuring that everyone is on the same page when it comes to special sales, promotions, or campaigns.
Everyone in your company should know when to accept a deal, when to discount, and when to close out an opportunity.
Putting these controls in place will keep your deal values high and your margins healthy. It also gives your salespeople the power and permission to say “no” when a prospect is hunting for the cheapest deal possible.
These controls are so important, in fact, that we’ve included them in the Fundamentals of our Revenue Efficiency Pyramid. To learn more about the Revenue Efficiency Pyramid and where your company currently stands, contact us for a free RevOps Workshop.
- Putting pricing controls in place is the best way to improve your average sale value
- Start with these foundational processes:
- Have a department outside of sales take ownership of pricing (we recommend the finance department, with input from Product, Marketing, and Sales)
- Put rules in place for discounting and enforce them
- Ensure your salespeople are focusing on your ICP
- Consider bundling products to create better offers
- Keep everyone on the same page with clear communication
When you’re ready, here’s how we can help:
Get a Free 1:1 Revenue Efficiency Workshop
Get one of our Senior Revenue Strategists to yourself for 1 hour and leave with a plan to increase the money-making power of your go-to-market operations.
Bring us on as your Strategic RevOps Team and realize the growth potential of your revenue engine. There are 3 ways to work with us.
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