Fifth, arbitrary discounting may signal to the market that your first attempt at pricing was
gouging. If you discount price under pressure, you were charging too much to begin with.
Companies that employ integrity pricing or programmed pricing that is available to anyone
who meets the criteria develop trust with customers. Customers rest assured that no one
gets a better deal than they do. Those who make random decisions about pricing raise suspi-
cion and cast doubt on a company’s integrity.
When management and marketing assign pricing authority to salespeople, whether they
describe it as empowerment or negotiating leverage, they are delegating their fiduciary responsibilities to the organization. If salespeople are designing and executing strategy, there
is no need for marketing or mid-level management.
Tom Reilly is literally the guy who wrote the book on Value-Added Selling. Tom is also a faculty member for the University of Industrial Distribution. You may visit him online at www.
In a recent article for The MHEDA Journal, Tom Reilly outlined more reasons
why distributor salespeople struggle with the burden of discounting:
“In a recent University of Industrial Distribution (UID) presentation I had the
opportunity to survey attendees (salespeople and their managers) to determine their greatest challenges. Their responses give us insight into the hurdles
they face in their territories.
Ninety-three percent of the respondents told us that dealing successfully with
price shoppers or customers that commoditize the seller’s product was a challenge. One reason salespeople find this difficult is because their companies
lack a coherent and consistent pricing strategy. These salespeople hear mixed
messages from management on how to price their goods and services. Managers can simplify the salesperson’s life by practicing a pricing discipline that
gives the salespeople an anchor to hold on to when things get turbulent with
Ironically, salespeople who work for companies that refuse to discount and do
not burden salespeople with pricing authority bring fewer price objections to
seminars. A number of them have told me that it is liberating to talk to customers who know this supplier will not buy the business with a cheap price.
One young sales rep said to me, ‘Since I know we will not compete on price, I
spend all of my time trying to figure out a way to sell our value.’”
(The MHEDA Journal, July, 2012)