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When It Comes to Pricing, Should Sales Reps Have So Much Flexibility?

Fri, Apr 13, 2018

Sales reps are dealmakers, they can make or break the quarterly and annual results. Many need the flexibility to create deals with variations on pricing and volumes, and many get away with murder!

This flexibility is great, it’s empowering for sales teams and it gets them owning their targets and granted, some businesses trade that way. However, all companies I’ve seen that operate to some degree in this way have neglected to ‘check’ this flexibility with the right software and reporting to ensure they don’t start a downward spiral of margin erosion and unprofitable customers.

When this flexibility starts, it’s like a crack in a dam wall. More and more of this ‘dealing’ outside of agreed trading terms creeps across more customers and product lines.

To illustrate, here is a real and recent situation…

Our sales teams have a lot of say on what deals they make based on their customers’ ever-changing needs at the time. There is little to no standardisation to our pricing or deals. It comes down to what’s agreed on the day. The sales team then process their own orders themselves, and it’s difficult to gauge why or where there has been a ‘manual override’ price in the system.

The outcome of this is that we have unprofitable deals, but don’t know which ones. Some clients are hugely profitable, some are not. The sales reps themselves set their own benchmarks on where pricing needs to be. There are no guardrails.

We need a solution that gives them the flexibility with margin visibility, plus the option to build in volume break discounts, and rebate targets to move the conversation up the chain vs. just focusing on the deal at hand."

So here it is, a pricing software checklist for what you and your sales teams need:

  • A fast and easy way for sales reps to load pricing for their deals to ensure they get charged the right price on their sales invoice.
  • A pricing approval process – input the deals, they then get approved and set live.
  • Pricing software (like Flintfox) that gives flexibility with guardrails on volume and pricing.
  • Reporting on deals so the business understands what deals have been done outside of standard trading terms.

A full understanding of deal components that lead to profitability – incorporating rebates/freight/discounts etc. so there is dead net margin visibility.

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