Why You Don’t Have Fixed Pricing

Salespeople sometimes complain that they don’t have fixed or standard pricing. They believe that their jobs would be easier if they had fixed pricing, and that would more easily qualify and disqualify their targets. They are simply wrong on this point.

Salespeople also believe that the reason that they don’t have fixed pricing is that their sales leadership believes that they will leave money on the table. They are correct on this point.

But these salespeople don’t fully understand that the money that they are leaving on the table isn’t only the money that they would charge their client for their services. They also leave money on the table that their client might have claimed—had they done a better job selling.

You Aren’t a Commodity

If you are a commodity, you can stop reading right here. There isn’t much I am going to write here that is going to mean all that much to you. If you sell price because that is your company’s strategic decision, then you are right to sell price. You probably have fixed pricing, too. But if you don’t sell price, if you sell something else, then read on.

If you are not a commodity (or intend not to be one), then it is your obligation as a salesperson to create the most value that you possibly can for your clients and to capture some portion of the value you create for your company and yourself. It is your job to spend time working to understand and diagnose your client’s needs so that you can build with them a solution that creates the most value possible.

If you sell your preconceived solution based on what you believe they need before you spend enough time exploring, then you have a preconceived idea of the value you create and what you can charge. But if you really explore, if you dig deep and act like a consultative salesperson, you’ll move way beyond this point. You’ll find that there are results that you can help your clients achieve for which they would gladly invest more.

You don’t have fixed pricing because you are supposed to be maximizing the value you create for your clients, and there is range of possible investments that they can make to generate the results that they need. If they need greater results, the investment is necessarily higher. If they need greater results, but suffer from financial constraints, you need the flexibility to price your offerings to get them the best result that they can afford.

Doing less than this is behaving like a commodity.

You Will Behave Badly

Now, let’s tackle your leadership’s fear that you will automatically go to the lowest possible price, were you to have fixed pricing.

Maybe you would, and maybe you wouldn’t. Your compensation structure may incent you for selling above the minimum price, but when the clock starts running out and deals are needed, lots of deals find their way to the bottom. Some salespeople would get above the line, but most choose speed and a closed deal, knowing that time is fleeting. Many more just go straight to the lowest price.

But even if the bottom price meets your company’s revenue and margin goals, by chasing the bottom you make it less likely that you will do the work necessary to find ways to create and deliver the value that your client really needs. It is a disservice to your client, a disservice to your company, and, ultimately, a disservice to you.

Learning to sell well means doing what is right for your clients, even when doing what is right for your clients makes it more difficult for you. This is why fixed pricing doesn’t work, and why you don’t have it.

Questions

Why do some salespeople want fixed pricing? Is it about doing what is right for their clients or doing what is easiest for them?

Are there things that you could do to help your clients produce better results were they to invest in getting those results? Are there different needs that may exist that you can help your client achieve if money were no object?

How does not having fixed pricing make selling more difficult?

How does not having fixed pricing make selling easier? What does it do in the way of eliminating fixed value creation?

Filed under: Sales 3.0

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