Use Pricing Tools and Research
Learning Objectives
After completing this unit, you’ll be able to:
- List five common pricing resources.
- Describe when to work with approvers.
- Describe how to research your customer.
- List five questions that help you get to know your customer.
Get the Price Right
Before you set out with your customer to build and price a deal, your company likely has a number of pricing tools and terms that you need to be familiar with. Here are some of the most common.
| Pricing Term |
What It Is |
When to Use It |
|---|---|---|
|
Worldwide/company price list |
List of prices for all product SKUs |
When you need to know the price of a product |
|
Discount approval matrix |
Hierarchy of approvers for pricing discounts |
To get the approvals you’ll need to offer different discounts |
|
Pricing system |
Often color-coded, this guidance helps you know if your pricing is great, good, or below average |
To make sure your pricing is right for the size of your deal |
|
Percentage-based pricing |
List of products with derived pricing |
When you need to know the price of a percentage-based product |
|
Approval matrix–quoting |
Hierarchy of approvers for contractual terms of a deal |
To get the approvals you’ll need for terms in your deal contracts |
Let’s take a quick look at each one.
Worldwide/Company Price List
As you probably guessed from the title, this resource lists product prices across your company, and can also be created to include major global currencies. And you can’t make a quote without prices, right?
Discount Approval Matrix
Next up is the discount approval matrix. The discount approval matrix shows the level of discount you can offer on your own, and who you need to approach for higher discount approvals.
Customers like discounts, and you likely need to get approval before you go offering them. This is your go-to doc.
Pricing System—Green, Yellow, Red
No matter what kinds of discounts you’re getting approved for your deal, your proposed pricing should be supported by a solid business case (showing why your proposed discount makes sense). Larger deals often see lower pricing, but going too low can set dangerous precedents for future deals.
Many companies use a pricing system that shows how to price products based on the overall size of the transaction while protecting the health of the overall business.
Here’s a color-coded example.
- Green: Pricing that’s good for the company is at or above the numbers that have been determined for the green threshold and are good to go!
- Yellow: Most deals should be priced at or above the numbers your company determines would be considered in the yellow threshold.
- Red: Deals rarely should be priced as low as the numbers that have been determined to be in the red threshold.
Approval Matrix—Quoting
Similar to the discount approval matrix, an approval matrix can help guide you to who you need to work with to get approval for the contractual terms in your deal.
Put Your Research to Work
Research is another important tool. If you completed the Prospecting to Improve Sales module, you learned that doing some initial research helps you make a connection with your prospect. This means spending a little time on Twitter, LinkedIn, Google, your prospect’s website, public records, and so on, to get a baseline understanding of your prospect and their business.
Your research helps you answer some of these questions.
- What products or services do they sell or provide?
- What brands or business units (BUs) comprise the organization?
- Who are the company’s customers? What do you know about their customers?
- What is their recent financial performance? Are revenue and profits growing or contracting?
- What is their level within the organization?
- Who do they report to? Who do they influence?
- What department do they represent?
- Are they a decision-maker?
But remember: You don’t learn everything you need to know by sitting in front of your computer and googling. Once you know the basics, it’s time to connect with your prospect.
Start the Conversation
Come to the conversation with questions.
First, it’s useful to understand how the customer’s business is organized. Here are a few questions that help you see how customers run their orgs before you dive into more buyer-specific questions.
- How do you report and forecast today?
- What slows you down today?
- How is your sales/operations/HR/and so on organization structured? Do you have outside partners?
- What’s the geographic coverage today, and where do you want to take it 1 to 3 years from now?
- What are your business goals? What about future goals?
The more you know about your prospect’s business and what they care about, the easier it is to meet their needs with your products/services.
Now that you’ve learned about pricing tools and have key information about the prospect and their business, you’re ready to create a pricing strategy.