Vendavo-Glossar

Deal Price Guidance

What is Deal Price Guidance?

Deal price guidance uses historical trends and business guidance so you can assign the right price for your products, segments, and deals at the right time. Sales reps can review and use the target, stretch, and floor recommendations.  

Also often referred to as deal guidance or price guidance. 

Why is deal price guidance important? 

The ability to provide sales teams the right price for their deals at the right time is key to improved win rates and faster cycle times, better negotiations, and overall customer experience. 

Companies often treat their customers with a “one-size-fits-all” approach or potentially take one attribute, often revenue, as the factor deciding a target price. Sales reps then have a set amount of autonomy to discount and negotiate. The downside is to companies who are similar in company revenue and even in the same industry are paying very different prices for the same purchase. Is there a business reason for this? If there is not than proper, business-priority focused price guidance is key profitability and higher win rates. 

 Guidance should come from the top to establish and communicate processes to the price-setters and sales teams.  

Benefits of deal price guidance: 

  • Capture customer willingness-to-pay. Segmentation is driven by and can vary from customer to customer, from product to product, and in all the locations that they use your product. By using customer willingness-to-pay, perceived value is taken into account and provides better guidance to sales teams and the prices they should be providing or negotiating for. For more on the importance of segmentation.  
  • Create consistency in the deal process. Setting deal and pricing parameters for sales teams, that include and incorporate discount levels and other guardrails, creates internal consistency, and drives standard behaviors and sales strategies. In the long-run, the pricing guidance also helps eliminate unforeseen risks. 
  • Replace guesswork and redundant approvals. Standardizing your processes, especially through deal price guidance, moves your team and the Sales reps past guessing the right price or negotiating out of a price based on customer perceived value. Determined by using a mixture of historical transaction data and your business expertise to calculate and deliver optimized prices that maximize margin and minimize the risk of losing customer during any sales negotiations.  
  • Have a competitive advantage. Pricing guidance gives you the opportunity to raise your prices, limit options, offer tiered pricing, move away from transactional pricing, and stay ahead of the competition with intelligent pricing models.