Setting prices is challenging, especially for software, where prices must account for a product that is continuously getting better with daily, monthly and yearly improvements. Effective software pricing models are carefully crafted to both attract customers and reward you for the value they receive on Day 1 and Day 365.
So, after all the work it took to create a winning pricing strategy, why do some companies struggle holding the line on those prices?
Resistance from the sales team can derail a pricing strategy
Sales team resistance is a real and common obstacle at the launch of a new pricing model. Even with significant training and communication, front-line pushback can crop up with the first tough negotiation. A rep who believes a big opportunity is in jeopardy because the new pricing doesn’t allow enough discount or flexibility may try to convince the company to stray from the model. And when that rep is a superstar producer, it’s really tempting to make an exception.
Don’t do it.
Years of experience with hundreds of software pricing initiatives have taught us that an undervalued contributor to the success of your strategy is a steely resolve to be a leader. A leader willing to draw a line in the sand. A leader willing to walk away from a deal rather than compromise the integrity of the strategy. With that resolve, your sales team can quickly focus on capitalizing on the new strategy, instead of circumventing it.
In the video clip below, Walker White, former president at BDNA and a customer of SPP, recalls a time when he successfully held the line on a pricing strategy. In an interesting turn of events, although his star sales rep initially balked at the pricing change, he ended up producing a record year at over 260% of the plan.
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