The Strategy and Tactics of Pricing, 5th Edition

Chapter 5Pricing Policy

Managing Expectations to Improve Price Realization

How should a company respond when a key customer announces that its next contract will be determined by a “reverse auction”? How should it respond when some of its customers are experiencing an economic downturn and ask for help? How should it deal with customers who resist a price increase necessitated by increased costs that all suppliers are experiencing? Responding to such challenges with ad hoc “price exceptions” rewards those customers who are the most aggressive negotiators, and ultimately alienates a company’s best customers. Those aggressive customers slow the sales process with increasing requests for “exceptions” that have to be sold internally. ...