Excessive discounting can truly hurt your business. Factors like lack of training, employee inexperience, and overzealous salespeople can often create a culture of excessive discounting that leads to lost revenue and eroding profit margins.
So how can you stop discounting from getting out of control?
Let’s first take a look at what causes a discounting culture and then what you can do to get your pricing strategy in order.
The Underlying Causes of Discounting
In addition to the reasons listed above, discounting can also be the by-product of manual sales processes and a one-size-fits-all approach to pricing. Setting a single list price and planning to discount that number based on sales needs is a slippery slope.
First of all, you’ll rarely sell at the listed price. Pricing will most likely drop further and further depending on the customer segment you’re servicing, and all of those variable prices will mean rounds of approval before the deal can close.
To make matters worse, quote approvals take time, leading to a continual back-and-forth between sales and pricing departments regarding the list price and go-to-market price, further eroding pricing and profit margins and cutting down on revenue.
Companies that conduct their sales processes manually are also susceptible to excessive discounting and “make it right” costs to answer for order errors and quoting inefficiencies. Furthermore, their sales teams aren’t taking advantage of up-selling or cross-selling opportunities, starving the enterprise business from added revenue on every sale.
Ultimately, without an effective method to maintain and update pricing data across all channels, the company could be selling their products and services for less than they’re actually worth.
Getting Your Pricing Strategy in Order
Thanks to today’s technology, getting your pricing strategy where it needs to be is easier than ever. By using modern pricing technology like CPQ, you’ll be able to eliminate unnecessary steps, optimize pricing, and stop discounting in its tracks.
That’s because CPQ technology allows you to gain rich, deep insights into your deals and sales processes while getting you out of the time suck and logistical nightmare of emailing multiple spreadsheets back and forth.
What’s more, whether you’re working on a single, straightforward deal or putting together multiple deals with different contract levels and/or cost structures, CPQ technology helps reduce complexity and streamlines the sales process.
It can also help your sales reps move more quickly and independently when it comes to small- and medium-sized deals, allowing them to focus more of their time and energy on the deals that matter most.
Last but not least, the right CPQ solution can speed up decision-making and quote-creation time by consistently analyzing market data for your sales team.
Let FPX Help You Get Your Pricing Back on Track
FPX CPQ can help your organization source and manage pricing data while distributing any changes across the organization. Let us help you simplify incredibly complex pricing processes, making you more agile and ready to change with the market.
Our automated workflow and approval processes, analytics on pricing, promotions, and discounting, and integration into ERP and CRM systems can help you recover what otherwise would have been lost revenue by giving you insight into your processes and putting an end to excessive discounting once and for all!