How To Simplify Non-Transparent Pricing: Assume Everyone Knows What Everyone Else Pays

Now being on the buying end of several products with “Contact Me” pricing, I’ve found many reps (especially more junior ones) very aggressive on the lack of transparency in non-transparent pricing.  I’ve also watched us walk away from several interesting vendors because it was just too hard to work with the sales reps.

From that, I’ve tried to create a simple paradigm around non-transparent pricing:  Assume Every Other Customer Knows.  I’ve found this radically simplifies things at least until, and maybe even after, you have a big CPQ system in place, a strong sales ops process, and careful monitoring of deal structures, discounts, etc.

The idea is so simple it’s hard to even bullet it out, but when you put together a custom deal:

First, just assume all the other similar customers know each other’s pricing.  And they may well find out.  If you charge Google $100k but Facebook $500k for the exact same number of users, and they both meet up at your customer conference this year … they may find out what each other pays anyway.  Make sure you’d have no problems if every other key customer found out about the terms and pricing in the custom deal.

Second, it’s fair and OK to make adjustments for time and grandfathered pricing.  I wouldn’t be upset to learn one of your first customers from 2013 pays less than me.  I would be upset to learn a larger customer from last week pays half of what I do.

Third, put a rule in place when you structure a custom deal, that the rep has to have it approved not just in general, but within the bounds of the 5 most recent deals for similarly-sized customers. No one will want to do this work.  But it will inure to your benefits in NPS, in faster and simpler closes, and in less drama.  Make the reps write out the last 5 similar deals.  If you are marching pricing upmarket in general quickly and aggressively, it may be OK for the latest deal to be higher than the last similar one.  But in general, for a given window of time, consider if similar customers should pay similar amounts.   I vote yes.

Sales reps often don’t love this idea.  It doesn’t make their job any easier.  You might even leave a little money on the table.

But then each night, each quarter, and each year you’ll know even with “Contact Me” pricing, that all your top and most important customers were treated fairly.  Sounds like a worthwhile investment to me.

 

Published on March 29, 2019

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