E
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EMEA

MM Account Executive

Good Citizen
Fire Starter
Contributor

Unethical pricing, List price = Minimum price?

Hi fellow savages, brothers and sisters,

Since recently I started in a MM AE role at a new company. It turns out that they apply what they call "value based pricing" which means that there is no maximum price. The sales rep can make up pricing as long as it doesn't get below the minimum price. 
Which causes that some companies with the  exact same package pay 85k EUR /Y and others 5k EUR/Y.

I come from a company where we were not able to sell above list price and where approval flows based on the discount offered were in place. Which makes a lot of sense to me, but I might be biased.

To me it feels unethical to apply these kind of pricing strategies but I am curious to hear what you think.


🧠 Advice
🏙 Corporate Experiences
😳 Ethics
13

15 comments

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GDO
Politicker
6
BDM
I loved this. Had this at my previous gig.

I put some fat on the contract and when they started negotiating I told them: no price decreases however I can give you x for free. Boom more revenue and everybody happy
Maximas
Tycoon
2
Senior Sales Executive
Sounds like my plan too in these sits too,cutting off from there and add to here is definitely my strategy ,nice tactic:)
boredAnti
Tycoon
3
That One Guy
This happens all of the time within the hardware world, or at least it did when I sold copiers.
Car sales do it too, tbh.
CuriousFox
WR Officer
2
🦊
Sounds like a dirty business 😆
boredAnti
Tycoon
1
That One Guy
lmao you shush
SoccerandSales
Big Shot
3
Account Executive
This is pretty common, in my experience companies are not concerned with a max cost, really just a mentality of get what you can
pirate
Big Shot
2
Account Executive
That is crazy because at some point customers will talk or know each other. And then they will find out. And then it's like well why did someone pay this much...
But it depends if you actually offer services or the solution is highly customized based on each customers needs. Then it makes sense that pricing could vary a bit.

I had this in the past where we had a list price and some reps still sold above it by 5-10% and it helped them to reach the quota. As it progressed, it was flagged to management who put a stop to it.
Pachacuti
Politicker
2
They call me Daddy, Sales Daddy
There is nothing wrong or unethical about this type of pricing. In fact it’s the way many companies do it, they just happen to be telling you about it instead of keeping you in the dark.

Think about a Gucci bag. It’s like $500’or something. Do you think it cost them a fortune to make? No. It cost the same as some Walmart bag. They just mark it up for the rich people to think it’s something special.

So if you can charge more money and make more money - do it. Sell the value. Cause if you don’t believe in what you sell, who will?
Diablo
Politicker
1
Sr. AE
Value based pricing - do you confirm how much the client is willing to pay during the initial convo? Which industry is this btw?
I haven’t worked for structure like this but I don’t see it sustainable over a long run. There could be a huge churn if a competitor pops out of nowhere with a different pricing structure:)
EMEA
Good Citizen
0
MM Account Executive
Me neither, I only started here 1.5 months ago. And yes during the discovery phase the reps try to have an understanding of what they can ask for pricing and just make it up as they go. It is Marketing Tech and I agree that this strategy is unsustainable.
Sunbunny31
Arsonist
1
Sr Sales Executive 🐰
You're given a floor and need to figure out what the price should be in your world. That's quite a bit of freedom. It's not unethical, but you really will need to sort out for yourself what you're comfortable with and what makes sense to have as your first offer to your customer(s).
CPTAmerica
Opinionated
1
President/CRO
It can be helpful but depends on the product, customer and what sort of guardrails are in place.
Justatitle
Big Shot
1
Account Executive
"Business Ethics" - Billy Madison
Kosta_Konfucius
Politicker
0
ERP Sales
i would say its ethical until I saw the 5k and 85k option
PhlipOut
Politicker
0
Account Executive
unethical? nah. I worked in a place like this. we could not discount under list, except for multi-years. but even that was pre-determined.
so we always quoted above to be able to negotiate down if needed.min 20/30%

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