Should I let my sales team set prices?

It’s been said a happy sales force is a productive sales force, but properly pricing your products and services is a management or marketing function and should be left in the hands of the people who have the most vested interest in the profitability of the business.

Salespeople like to cut prices and give away precious gross-margin points, often without the customer even asking for a discount, just to make the sale. The next time a salesperson takes the liberty of lowering a price or habitually asks you to cut a deal for a prospective customer, remind them that the price for which anything is sold is directly related to the ability of that salesperson to sell. In other words, if the salesperson can’t sell it for the published price, they may as well confess that they are not that good of a salesperson.

If you want to keep your salespeople happy and motivated, try these tactics:

• Conduct regular sales-training sessions with plenty of simulated skill practice. Your sales team will probably initially balk at role playing but stand fast and stay the course. The more you incorporate skills practice into their regular training, the less of a stigma there will be attached to it, especially if you conduct the sessions in the presence of their peers.
• Build a compensation plan that is based on profitability, capturing target accounts and/or other desired outcomes. If you want to increase market share via outselling the competition, then offer meaningful, usually monetary, rewards when someone exhibits the appropriate behavior and attains the desired outcome.
• Encourage calculated risk taking, out-of-the-box thinking, and benchmarking best practices of other companies. A great sales meeting discussion is to brainstorm names of companies that exhibit and practice a core competency in an area in which you would like to excel or improve. Become a student of how certain companies were able to develop their core competencies and achieve success.

—Your Personal Business Trainer