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Who and what should dictate cleaning product pricing?

How to avoid a never-ending price war with your competitors

The price of your products is a fundamental element of your sales and marketing strategies. Competition is continually fierce in the cleaning industry and the costs of your goods – relative to those of your competitors – can often make or break a sale. It follows that many cleaning supplies salespeople use discounting to enjoy quick and easy wins. These wins are short-term sales spikes, however; they don’t contribute towards building long-term profitability or loyal customer relationships.

In fact, discounting will simply draw your company into a never-ending price war with your competitors – and it will eventually kill your business. To avoid any dependency on discounting, you need to carefully plan who and what determines the price of your products.

Market Power

If your President, director of finance, or sales has sole control over pricing, you’ve got a problem. Each of these individuals have their own agendas that, in all likelihood, will either drive the price up too high or too low.

Theory suggests that marketers are best-placed to decide the price of products. Let’s go back to business school for a minute and recall the 4Ps of a good marketing strategy:

  1. Product
  2. Place
  3. Promotion
  4. PRICE

Marketing can position and promote your product in such a way that price is not the only deciding factor when your customers are in the market for cleaning supplies. With a bit of market research, some clever competitor analysis and a keen eye on buying trends, your marketing team is generally more clued up on what your customers want – and are more willing to pay for this knowledge – than any other department. That’s not to say that senior management, sales reps, or finance advisors should be excluded from the mix: it needs to be a combination of efforts. But ultimately the process of determining product pricing should be led by marketing.

There are five key questions to ask before settling on a price:

  1. How will your product or service add value to your customers’ businesses?
  2. Are your customers price sensitive?
  3. How is your offer different to your competitors’ products or services?
  4. Are your customers willing to pay $XYZ for your goods?
  5. What margin do you need to make on the sale of your goods?

Dangers of discounting

Discounting denies your salespeople the chance to build solid relationships with repeat customers – instead, they move from fling to fling with one ‘deal shopper’ after another. It might push goods out your door fast, but discounting will hit your long-term profits hard.

Consistently undercutting your competitors through discounting is risky business. It eventually reduces your products to mere ‘commodities’ and this, in turn, devalues your entire company. You’ll only do business with customers who are fixated on price rather than real value. And, the easier it becomes for you to slash your prices, the more suspicious your customers will be about your mark-up beforehand. Discounting can sully your company’s reputation very quickly, as well as increase your costs and workload as you ramp up production to maintain your revenue targets.

In short, discounting is bad for business – and unnecessary. If you know your customers inside out and can provide them with a quality experience that keeps them coming back for more, you won’t need to cut your prices. The right, data-driven technology can help you achieve this, giving your sales and marketing teams the proactive insight they need to pre-empt your customer’s next move. True value is not reflected in the price tag, but in the quality of your goods and your relationships.

Bruce Kopkin is the General Manager of sales intelligence software company, sales-i. During his 30-year career to date, Kopkin has held a number of executive sales and marketing positions in the technology, manufacturing and distribution industries, including tenures at IBM, GT Software, IRIS, JDA Software, Lorentzen & Wettre, Indus International and Honeywell.

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Categories: Measuring Success / KPIs, Operations, Sales and MarketingNumber of views: 554

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