How a quoting system helps you roll new-school business technology into old-school sales processes. It’s not one or the other: it’s the best of both worlds.
Pricing is something that every business loses sleep over at one point or another. Setting a price is an important decision with serious ramifications. Set the price too high and you risk losing customers. Set the price too low and you could devalue your products and damage the bottom line.
In particular, when it comes to quoting prices through proposals, there’s a lot to think about. How you convey pricing in a proposal format can ultimately determine whether or not you’re successful. Are you getting the price wrong?
4 Side Effects of Poor Pricing
“Pricing is as important as any business decision, but frequently it is treated as if it were no decision at all,” serial entrepreneur Jay Goltz explains. “Business owners just keep doing whatever they have always done, for better or worse. They do this because they fear they will — as they’ve been told a thousand times — price themselves out of the market.”
Are you still doing what you’ve always done, just because you don’t want to rock the boat? Well, be very careful. It’s entirely possible that the prices you’re quoting new prospects aren’t within the optimal range. If that’s true, you’re probably experiencing one or more of the following problems:
1. Hurts the Bottom Line
One of the most visible side effects of poor pricing is an impacted bottom line. Whether you go too high or too low, it’s likely that you’ll feel some sort of influence. High pricing alienates a large percentage of your prospects and drags sales down, whereas low pricing erodes your profits and stifles revenue. Regardless of which end of the spectrum you’re on, poor pricing can have a negative impact on your bottom line.
2. Damages Your Reputation
Let’s pretend you’re a customer and you walk into an auto repair shop because you notice that your vehicle’s air conditioning isn’t as cold as it should be. You ask them to take a look and diagnose the problem. Sure enough, they tell you there’s an issue and quote you $700 to get your air conditioning back to new.
Because $700 is a lot to spend on repairing your car’s AC, you decide to visit two other repair shops for quotes. One shop quotes you at $150 and the other says they’ll repair it for $175. Not only are you going to choose one of these lower priced quotes, but you probably have a pretty poor view of the first auto repair shop you visited. Either they tried to rip you off by charging you almost five-times the appropriate amount, or they’re totally inadequate at what they do and misdiagnosed the problem.
This is one of the biggest problems with poor pricing. Whether it’s purposeful or unintentional, quoting a prospect a ridiculous figure damages your reputation with them. Not only that – they’re likely to tell others about your pricing and you may end up losing additional business in the future.
3. Offends Prospects
The third problem with incorrect pricing is closely related to the second problem. When you give a prospect a price that they know isn’t in line with what the current market demands, they may actually take offense. You’re essentially telling them that you don’t believe they’re intelligent enough to know whether or not the price is right. In the end, this can erode your business relationships and even hurt existing client relationships.
4. Slows Down the Supply Chain
Depending on the industry and business you’re in, poor pricing may slow down the supply chain. When your pricing becomes too high or low for the marketplace, you’re going to see a change in demand. Regardless of whether this variation is positive or negative, you’ll be forced to adjust what’s happening at each stage of the supply chain.
Ultimately, poor pricing will lead to huge fluctuations in demand, which kills consistency and frustrates everyone involved. So, not only are you damaging your reputation with customers, but you may also be creating friction between partners in your supply chain. The long-term effects can be costly in more ways than one.
Avoid These Common Pricing Mistakes
In order to avoid the four common problems associated with poor pricing, you have to make sure you avoid pricing mistakes altogether. Here are a few tips to keep you in line:
Setting price based on cost. Sometimes it can feel natural to set prices based on cost, but this is a huge mistake. Price should always be based on the value you’re presenting to customers. This is the only way to establish long-term profitability.
Putting off changes out of fear. It’s fairly common for businesses to get used to their pricing and fail to make changes because they fear customers’ reactions. While some customers will be upset, you’ll be surprised to learn that most will be fine. If you couple price changes with appropriate consumer education, you’ll discover that customers are actually quite accustomed to pricing fluctuations.
Giving everyone the same price. It may seem fair at first, but you can’t afford to give every prospect the same price. You need to carefully segment your customers. Everyone has different needs and perceptions of your company. Remember, pricing matches value – so you should align your quotes with each prospect’s perceived value of your product.
Simply guessing. In the early days of business, it’s not uncommon for startups to simply guess. These guesses are often based on other similar products and services in the marketplace and the cost of production. While this may give you a decent “ballpark range,” it’s a pretty superficial foundation and will end up hurting you.
Setting prices is not something to be taken lightly. While there’s always the temptation to make these mistakes, it’s imperative that you surround yourself with the right tools and resources in order to avoid blunders.
Contact iQuoteXpress Today
At iQuoteXpress, we believe few things are as important to a growing business as consistency. If you want to build a steady and reliable client onboarding process, then you need the ability to develop high returning proposals and accurate quotes every time, without exception. With our CPQ solution, you can reduce proposal time by 50 to 75 percent, increase quote accuracy, and close more leads. What are you waiting for?
The Catalog As Classroom: Teaching Team Members Product Specs
Configure Price Quote (CPQ) software is currently one of the most popular applications for producing accurate price quotes. It offers real-time data that can be used to improve the sales process as a whole. One thing that’s so great about this product is that it constantly evolves to match the needs of the current business world.
Because CPQ is constantly evolving, it becomes the responsibility of the business to project where they will be next and how this will affect the company. You should definitely evaluate what’s coming this year, in five years, and even in 20 years. It’s important to know what the future of CPQ software looks like, so here are a few predictions for you to consider.
Pervasion of the Cloud
At one point, those in the CPQ business believed that the market for this software would be equally divided between on-site and cloud-based use. However, it’s quickly shifting in the direction of the cloud. Though the shift is happening much sooner than most predicted, it shouldn’t come as much of a surprise, since most software applications are turning toward the cloud for software integration.
“The cloud speeds up business processes,” says Paul Kriete of iQuoteXpress. “And the companies that are able to adjust more quickly to customer needs are usually the ones who will be leaders in their industry.” Blasser also points out how the business world is rapidly moving in the direction of the cloud. According to his research, 54 percent say they’re using the cloud because it increases business ability and scalability while 48 percent are doing so for financial purposes, both of which, apply in the situation of CPQ software.
The cloud sets itself apart as a more useful, convenient form of software management. For starters, accessibility greatly increases with cloud-based software. In addition, companies can automatically send updates through the cloud and keep software from becoming outdated. It’s also much more effective for data storage, since users would no longer need to store data on their computers.
The transition to cloud-based software has already begun. Companies are beginning to offer incentives to their existing on-premise customers to transition to the cloud-based software. They’ll offer discounts on the use of their cloud-based platform in order to get more people using it. Because of this method, it’s predicted that within a decade, all CPQ software will be entirely integrated into the cloud.
More Dynamic Selling
In sales, there’s one sales tactic that’s taking the world by force: dynamic selling. It involves the being interactive, involved, and flexible with sales in order to meet the needs of your sales environment - and it’s the style of selling that goes best with CPQ software in the future. Expert dynamic sales reps today are looking to use CPQ software to support their causes, which is setting the precedent for all those in the sales sector. Within the next decade, the use of CPQ software in the environment of sales is expected to be mainstream.
This all comes thanks to the release of more agile CPQ software that offers the same flexibility of dynamic sales. Sellers get the responses and data they’re looking for without compromising on productivity. It’s efficient, affordable, and totally effective.
The future is all about automated sales proposals and better deals. For those struggling to make it in the sales world, this is what they need to get their sales businesses off the ground running, and keep experienced sales representatives competitive.
Deeper Integration of Business Intelligence (BI) in Sales
Companies have been using Business Intelligence to better their business processes for centuries, but it has grown enormously since that time. Companies have moved away from collecting data through talking face-to-face and mail-in surveys and moved towards finding this information through internet applications like social media and app use. This business intelligence is now making a name for itself in sales, growing at an annual compounded rate of 8.7 percent through 2018, according to Gartner.
Companies are able to grow their intelligence and information gathered from existing customers and discover things the customers love, things they hate, problems that need to be solved, and more. Sales people can bring specific products and services to the attention of customers according to what they love, all thanks to CPQ software that can gather information and automate the processes of price configuration and more for consumer benefit.
The proliferation of CPQ software is becoming more widespread than ever. It’s become a magnet of sorts for investors, attracting them to the software because of its unprecedented potential and many uses in the sales world. Investors are recognizing the benefits of such software that can cut through complex selling challenges and provide live streaming, making sales more visual and easy to comprehend.
Investors look for efficient investments that can bring in easy revenue. Through the improvements in configuration, pricing, guided selling, order management, price quoting, and other software capabilities, CPQ software has generated a sizeable interest from mergers acquisitions managers, and investors.
Use iQuoteXpress Software Today!
The future of CPQ software is rife with possibilities. Companies and individual sales reps alike are beginning to recognize the potential, and as a result, they’re seeking to make CPQ software an integral part of their business processes.
Those looking to stay ahead of the software curve and remain competitive should invest in CPQ software today. There are multiple, distinct software applications that can save you time and money through streamlining your efficiencies and increasing your revenue. We can be consistent with our detailed quotes and pricing product information, winning you more bids and putting your team at a higher-priority than others.
The best part is that if you’re interested in using our iQuoteXpress CPQ software, you can call today to learn more. Also, make sure to set up your free, no-obligation demo of our patented software. Don’t hesitate - contact us today!