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Sales Buy-In: Strategic Pricing for Improved Profitability

Pricing is an art form, not an exact science, and requires a careful balancing act of maximizing profit potential, win rate, and customer satisfaction. And in today's uncertain economic climate, it's more important than ever to get sales buy-in on new pricing strategies.

A pricing strategy is only as effective as its execution, and many industrial companies are reluctant to address pricing for fear that their sales force will resist new guidelines.

This fear stems from the belief that implementing new pricing strategies means imposing rigid rules on sales negotiations, neglecting the nuances of their market and deals, or setting unrealistic profit expectations. But a well-designed pricing solution that considers the sales team's needs and concerns can significantly reduce the risk of resistance and increase adoption, and in turn, profitability.

Backed by decades of experience with Private Equity and their industrial companies, here are the top strategies for achieving and maintaining sales buy-in on new pricing.

Proactive communication and involvement

Change resistance isn't limited to pricing strategies or sales teams — any significant organizational change is typically met with some hesitation. And in any case, clear communication plus proactive seeking of input go a long way to smooth the transition.

This begins with clearly articulating the why behind the change, involving key sales stakeholders from the inception of the decision-making process, and ensuring their teams have access to ongoing training and support.

Adoption Objections Sales Buy-In ImplementationBy integrating the sales leadership into the pricing strategy, they're able to contribute their deal success and customer expertise and become active participants in the process. So instead of receiving new price guidelines with limited context behind the rationale, their understanding and commitment increases, and the implementation of the new pricing is much more likely to succeed.

Guardrails, not handcuffs

An updated pricing strategy doesn't just mean adjusting prices up or down indiscriminately, or treating all customers, markets, or deals the same.

Instead, it should be about establishing guardrails that are based on where similar deals have successfully and profitably closed, while also ensuring the prices are aligned with desired market position. By providing guiderails, not specific price points, the sales team has the autonomy to negotiate. This approach empowers your sales force with data-driven price guidance, while still providing flexibility and the opportunity for them to apply their expertise to close deals.

For example, a minimum price floor that ensures profitability along with a target price and stretch price ceiling still allows for negotiation within the recommended range.

Adoption Objections Sales Buy-In Guardrails

Incentive alignment

Aligning sales rep compensation with the business's pricing strategy is key for hitting sales goals and keeping pricing on track. When reps are motivated to sell at higher prices, they focus on boosting profitability instead of just pushing volume. This helps maintain product value and prevents unnecessary discounting, which can be harmful to both profit and brand reputation.

Incentive alignment also helps make the sales process smoother and more predictable. Reps who are rewarded for sticking to strategic pricing are less likely to give unauthorized discounts, resulting in a more consistent customer experience. Price consistency builds customer trust, while delivering more predictable sales outcomes. Ultimately, aligning incentives with pricing strategy fosters a sales culture that values profitability and long-term profitable growth.

Wrapping up

The risk of price resistance and low adoption decrease significantly when sales is involved in the pricing strategy process, price guardrails replace more strict targets, and price guidance is aligned with sales incentives.

In doing all of these, pricing becomes a powerful means to not only improve sales effectiveness, but also drive business growth through an organizational improvement in pricing understanding and pricing profitability.

If you want to learn more about how to approach strategic pricing to maximize adoption and results, talk to a PE-backed industrial pricing expert.


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