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REAL ISSUES. REAL ANSWERS: Price Wars

QUESTION 2

When your sales and margins are hammered by a price war, what (if anything) does your company do to minimize the financial impact on your team?

“We don’t do anything to minimize the financial impact. Sales people are paid a commission on gross profit and they take the good with the bad. While price is always important, it isn’t the only factor and often it’s not as important as we think. We bring value to the table beyond price and we need to communicate that effectively to our customers.”


“Depends on who is in the bidding war. Our staff is paid hourly with no commission. We have slashed margins in specific bids to send a message to competitors.”

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“I try to avoid price wars at all costs. I would rather walk away from a sale where the margin is too low. To me, ‘making the sale no matter what’ is the wrong way to approach sales. You have to price your bid to account for what you need to maintain your business and to make a fair profit. If you can’t do this, you will not be in business for long.”


“We do our best to remind our customers that we do provide value. They already like our product, people and service, that’s why they are our customer. We fight hard not to give it away.”


“Make concessions elsewhere.”

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“We work to offset the impacts of a price war by going after higher margin sales.”


“Ask for vendor help so the margins don’t have to suffer.”


“Be in constant communication with customers, be vigilant on maintaining service standards, and be on the lookout for new categories/innovative items to sell, and continue to add value.”

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“Sales training stresses the value our company brings to the sale. We guarantee delivery times, ship orders complete or notify prior to shipping that there will be a backorder, and train our drivers and stockers to handle jobsite problems. As a manager, I stay involved in the bidding/pricing of quotes. Our market’s biggest problem is managers who were not trained as managers. Instead, they were poor sales people who became managers by default.”


“We lessen our service level to the customer.”


“We try to cut corners were we can.”

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