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Use the 80/20 Rule to Manage Pricing Exceptions

It’s a common knee-jerk reaction for salespeople to focus on increasing volume by offering discounts on every sale – even if it means sacrificing margins. One way to mitigate the risk of excessive discounting is to establish a pricing system that balances volume incentives with well-defined boundaries that sales staff must operate within.

Ideally, in an effective pricing system, the framework should provide guidance for as many as 80 percent of sales. This guidance should consider a comprehensive range of factors, including the type and size of the customer, the market and the nature of the opportunity. The direction should be clear and unequivocal, providing sales staff with “guardrails” that establish minimum and maximum prices or margins. Sales staff can bounce between these guardrails as appropriate, but they should not be allowed to go above or below the established boundaries.

Use These Negotiation Tactics When Presenting a Price Increase [INFOGRAPHIC]

As mentioned in a recent blog post, getting your organization ready for raw material inflation includes preparing your sales team for price increase conversations with customers. It’s a skill that needs practice and developing backup strategies in case of pushback is a key component to your sales training plan.

Need help? You can use our Negotiation Tactics Infographic as a starting point.

Are You Ready for Raw Material Inflation?

The Federal Open Market Committee released their most recent inflation forecast for 2017 and beyond. And while inflation remains historically low, it’s also on the rise, with 1.9% projected in 2017 and 2% for 2018. We have already seen raw material inflation edging up the costs of metal, rubber and other industrial commodities. To quote a recent Bloomberg article, these prices have been “on a tear” since the second half of 2016.

When you run a business, talk of inflation typically translates into fear and angst. Here’s how we suggest you prepare for what’s coming…

Sustainable Pricing Starts with Your Sales Force

Achieving significant pricing gains can feel like a long, hard-fought battle. This makes it all the more satisfying when the numbers start to roll in, validating your efforts and proving without a doubt that profitability is attainable.

The thought of losing those gains may keep you up at night. What safeguards can you put in place to protect the gains you’ve achieved and prevent your company from sliding back into past poor pricing habits?

It all starts with building a confident sales force.

How to Get Your Sales and Pricing Teams on the Same Page [VIDEO]

In many cases, we see sales teams compensated based on the volume they bring in without much focus on pricing. Contrastly, pricing teams are compensated based on improved margins. This creates a natural tension.

So how can your organization improve alignment between pricing and sales teams to ensure business goals are met? Lots of our clients have had similar concerns, so here, we answer frequently asked questions to bring your pricing and sales teams together working toward improved profits and overall success.

How to Help Your Sales Team Quote with Clear Guidelines

Does this sound familiar? A new customer promised they would place a $30,000 order, but only at an average price per unit of $0.16. The sales rep ran the requested price through their internal process, and because $0.16 was above the required 20 percent margin, the sales rep approved the discount. End of consideration.

But here’s where the story gets interesting. After looking at the average price points for the top 20 customers of this product, the pricing manager determined that significantly bigger customers – with purchase volumes in excess of $100,000 – were paying $0.18 to $0.22 per unit on average. In fact, the third largest customer, at $468,000 in volume, was paying a $0.22 average sale price.

What was the justification for the lower price for the smaller customer – other than the fact that the customer simply asked for it?

How to Get Your Sales Team to Raise Prices [Video]

When a company initiates a price increase, it’s common to fear pushback from the sales team. That pushback, however, can be overcome when you consider that pricing and commercial teams share a common goal: profitability. Most sales strategies are designed to drive more revenue and margin. Raising prices is, in fact, a driver for both outcomes.

When price changes are executed well, sales reps can actually make more money with less effort. The initial pushback from sales, however, can derail your best efforts. Here, we review three challenges associated with getting sales teams fired up about pricing and strategies to overcome them.

Help Your Sales Team Execute Price Changes Successfully: Free Webinar

After months of analyzing data, determining pricing segmentation and structuring a process for quoting prices, there is one thing that can make or break all your efforts (and your potential profits): your sales team.

What Behavior Does Your Sales Compensation Plan Incentivize?

This post was originally published on the HubSpot Sales blog.

The sales team at any organization has the power to directly impact the company’s bottom line. Depending on how much your team sells and how often, profits will likely follow suit. But the truth is, the way your sales team is compensated may affect your bottom line just as much.

Unfortunately, there is no perfect compensation plan. There will be pros and cons to any setup, and there will always be unintended consequences. The key is to find the right balance between controlling the downsides while still reaping the positive effects.

Here we take a look at several sales compensation plan possibilities, the behavior they incentivize from your sales team, the impact on the bottom line and, finally, how to make the most of them.

3 Ways to Increase Your Profits Even With Slow Sales

This post originally appeared on Inc.com

Want to make more profit? Just sell more, right? Well, you know it's not that easy. In fact, there's been some dire economic news lately, the gist of which says sales are down across most industries. In the face of falling retail sales and low expectations for a swift recovery, what are the chances your company will be the one to defy the odds and triumph with a record sales season?

You might very well be that exception to the rule. But if you're not, that's OK too--there are other options. Here are the three quick ways to increase your profits without making more sales.

Profit Insights | Insight2Profit