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 manages pricing exceptions and 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.

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.