Nothing makes my heart skip a beat like seeing a product management generated price list that includes discounts.
Why? No seriously, ask yourself why?
Volume discounts? Does the value of your product decrease when you increase the number of users? Should you not increase the price of your product? I know what you are thinking, the cost decreases. If you are pricing your product based on cost you are either over-pricing or under-pricing. You should spend a day thinking about this – soon!
Sales discounts? The Sales team is going to be asked for discounts and either comply to close the account (likely) or walk away (unlikely). What happens to your discounts? They get discounted even further. I would sooner sell 25 units at the 10% off requested by Sales than 25 units at 10% off the 15% off I already applied to my pricing model.
Please stop. Your product revenue is not nearly as high as it should be.
You will have to sell your product with discounts, but try not to encourage it by building discount based price lists.
Disclaimer: I realize that some products in some industries work differently, but please think about what you are doing with your price list and the applied discounts before publishing it.
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Agree, agree, agree. One of the big disconnects in the process is buyers at large corporations whose compensation plans are based on the amount they get off the initial offer, no matter what the need or value to the end company. They will knock you down so they can get their bonus. It makes sense to factor that in at the beginning (as in DON'T WRITE DISCOUNTS INTO THE PRICE LIST) to keep your margins, ARPU and total revenue up.
Great comment Tim!
Great comment Tim!
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