James Wilton is the Managing Partner of to make moneya monetization and pricing strategy consultancy specializing in XaaS and startups.
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Selling products and services is the foundation of growth companies. All too often, sales teams and teams responsible for pricing are at odds over monetization strategies. Pricing alignment is one of the most important strategic initiatives a company can take to achieve sustainable growth, especially in a dynamic economic environment. In this piece, I’ll share three pricing principles that will help your sales team follow your pricing strategy and maximize your company’s growth potential.
The Frenemies Zone
There are times when the sales and pricing teams can feel like enemies. The sales force is focused on new customers and often demands the freedom to close the deals that will grow the company’s revenue. The pricing team, on the other hand, must ensure that these new revenues reflect the value of the company’s products and services. That often requires standardized structures and processes that put limits on what sales teams can offer, pushing the sales and pricing teams in opposite directions.
While some friction is natural, pricing teams have a compelling reason to work with sales when shaping their pricing strategies: A sales force armed with an approach it believes in and respects can be a formidable force for business growth. By involving sales early in the development of the pricing strategy, sales teams can ensure that the strategy works when executed in the ‘real world’, and therefore they will be happier adhering to the restrictions and guardrails the pricing team puts in order to do business. enforce standards.
1. Keep it frictionless.
There’s nothing a salesperson hates more than having to sell a pricing strategy that requires thorough explanation and confuses the customer. It not only slows down the process and inhibits deal speed, but “time kills all deals”, so it can also exhaust the win rate.
To reduce customer confusion, the number of choices should be reduced. The more independent decisions a customer has to make, the more difficult the buying process becomes. A lot studies have revealed that when there is too much choice, customers are less likely to buy something. And if they do buy, they are less satisfied with their choice. By simplifying the choice, we can increase the transaction speed.
Buyers in different segments have different tolerances for decision complexity. For example, tech buyers may appreciate a highly detailed a la carte system that allows for a selection of individual items, while a busy startup CEO is likely to be overwhelmed by such an approach. Use your sales force to understand the level of choice customers want and build your pricing strategy accordingly.
Whenever possible, select scale metrics that are already well understood, as it can seem difficult for your company to do business with if you need to explain an intangible metric. And if your need for value matching means you can’t avoid selecting an unfamiliar price metric, get the sales team involved in strategizing how to make that metric workable in the field.
2. Include storytelling in the pricing design.
Good salespeople sell benefits. But great sellers tell stories. They can tailor their messages to customers in different segments and personas, while weaving the product into their story. This approach is considerably more difficult to do when the packages and prices do not fit within that flow.
In my experience, a key criterion of a seamless pricing approach is that a seller can build compelling stories around the packages and decision points. If a seller doesn’t see how to sell or position the offer, it’s doomed to fail. Often, new pricing strategies require new sales approaches, and the best people to shape this are salespeople. By inviting the right salespeople to help develop the story around the new pricing strategy, you can ensure that the messaging and structure is self-reinforcing.
3. Provide structure with flexibility.
According to a Harvard Business Review study“50% of those surveyed by high-performing sales organizations responded that they had sales processes that were closely monitored, enforced, or automated, compared to just 28% of low-performing sales organizations.” While they may argue otherwise, I’ve found that high-performing sellers appreciate boundaries, guidelines, and a firm, structured set of list prices and policies. That said, nothing demotivates a salesperson more than impossible-to-achieve sales goals and uncompromising demands to blindly adhere to guidelines.
As teams develop new pricing strategies, a wealth of market information, such as a customer’s willingness to pay and discount expectations, is gathered to make decisions that might make it seem reasonable to increase prices incrementally. But usually, sales teams are given pricing guidelines without this supporting research, which can make the changes seem unwarranted and ambitious. By simply sharing the full fact-base to support the changes, the sales force can dramatically improve adoption of constraints and goals.
While discount thresholds and pricing targets for specific segments are helpful, there are many nuances that can never be adequately captured by a pricing strategy or discount policy. A seller who is not authorized to make even minor price changes to accommodate specific situations risks losing the opportunity to be a respected partner to the customer. To get around this, sellers must have a discount threshold that they don’t need approval for. This provides the flexibility they need to control the deal process and tailor it to customer needs.
Execute pricing strategies with sales
Pricing strategies are executed through the sales team. Without their buy-in, implementing a pricing strategy will be a steep climb. High-performing pricing teams don’t view sales as adversaries to be overcome — they view them as key contributors to designing a pricing strategy that works both in reality and in theory. By sharing market research with sales, gathering their tribal knowledge, and enabling them to pressure the proposed pricing strategy, stronger results can be achieved together.
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