Quiz: Which Pricing Strategy is Best?

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  1

  PeterJ42

  10/28/09 | Report as spam

  RE: Quiz: Which Pricing Strategy is Best?

  This is quite simply wrong. The answer varies according to
  competitor activity, buyer expectation and salesperson
  competence. Giving black and white answers underestimates
  the complexity of the process.
  For example in large IT or construction projects, no-one ever
  got the deal by quoting the expected final price - the only
  way in is to quote a lower figure and make it up on
  "changes".
  Similarly some buyers are incentivised by the discount they
  negotiate - go in with the right price and you will lose to
  those who can give a bigger discount.
  Others will have a target price or budget - exceed it even by
  a small amount and you don't get to the next round.
  The correct answer - if there is one - is to do your research
  both with the customer and elsewhere and find the highest
  price which will get you the deal. If that's too low look at
  how you can add services etc. to make the job profitable.

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  2

  dale.underwood

  10/28/09 | Report as spam

  RE: Quiz: Which Pricing Strategy is Best?

  You mentioned this is a Govt deal. Govt purchases usually have 2 players; the end-user and buyer. If you are talking to the end-user you should never discount or negotiate because they are not price sensitive, they are function sensitive. The worst thing you can do is offer an equal or below price and hope to add features in the future.
  
  You only negotiate price with the "buyer" (sometimes referred to as the contracting officer). Buyers are professional purchasers who have been trained to protect taxpayer money and to (hopefully) do that by promoting competition. They will not care about the solution but rather the process that is followed to procure it.
  
  You will never, ever be able to uplift your price once a number has been moved forward from the end-user so forget add-ons later. Budgeting is done in advance and if the end-user allocates $1,500 that's the starting point.
  
  Although I answered $1,500 I would normally go with $1,600 but put a short expiration date on quote (never more than 10 days). That way your quote will expire and the contracting officer must come back to you before awarding the deal. By that time you will have a better understanding of who else might be in it and you can discount accordingly.