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  Ensure  Profitability  on  a  Big  Deal       Do  you  need  to  calculate  your  price  and  potential  profitability  for  a  single  account?    For  example,  you  may  be   negotiating  a  deal  for  a  unique  service,  a  complex  combination  of  customized  products,  or  just  trying  to   figure  out  how  low  you  can  price  a  service  you  already  offer.      

Summary       EXERCISE   SUMMARY  

When  to  Address  

Who  Should   Participate  

  Where  to  Use  the   Results      

  If  you’re  working  a  big  deal  and  negotiating  price  with  your  prospect       Business  leaders:  company  founders,  owners,  presidents  and  vice  presidents     Marketing  and  sales  leaders     Product  managers     Channel  managers     Use  them  as  a  benchmark  for  future  deals  of  this  type.  

Why  it’s  Important  

Sometimes,  big  customers  have  a  lot  of  negotiating  leverage  and  can  whittle  away   your  margins.  It’s  a  good  idea  to  know  your  break-­‐even  point  prior  to  entering   negotiations.    

What  Builds  Upon  it  

Your  pricing  should  still  reflect  your  value  proposition.    

  Timeframe  to   Completion     Potential  Business   Impact  

Roughly  30  minutes  to  one  hour.    

Medium    

 

Pricing  „  Ensure  Profitability  on  a  Big  Deal

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Deliverable  

You’ll  estimate  your  cost  of  goods  and  calculate  your  lowest  price  to  offer.    

Next  Steps  

Determine  your  price  sensitivity.    

    Target  Completion  Date  

 

  PARTICIPANTS                           TASKS              

PERSON   RESPONSIBLE              

DUE  DATE              

  Notes                          

Pricing  „  Ensure  Profitability  on  a  Big  Deal

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Ensure  Profitability  on  a  Big  Deal      

What  to  Complete      

1.  CALCULATE  PROFITABILITY  ON  A  SINGLE  DEAL      

Where  it  Fits  in  Pricing     Match  Pricing  Strategy  to  Value  Proposition   Define  Pricing  Strategy   Determine  Cost  of  Goods  Sold   Set  Price  Floor   Review  Competitors’  Prices   Determine  Price     Analyze  Competitor  Price  Changes   Determine  Competitor  Price  Change  Response   Gather  Price  Sensitivity  Data   Determine  Price  Elasticity   Find  Optimal  Price       Calculate  Profitability  on  a  Single  Deal      

1.  CALCULATE  PROFITABILITY  ON  A  SINGLE  DEAL     Do  you  know  (or  have  a  reasonable  estimate  of)  the  Cost  of  Goods  for  the  product  or  service?      Yes:    Use  66-­‐K  to  calculate  your  price    No:      Use  66-­‐L  instead    

 As  always,  we  recommend  talking  with  your  finance  team  about  any  COGS  estimate  –  companies  can   calculate  this  figure  differently.     Once  you’ve  completed  the  worksheet,  what  price  (or  range)  do  you  recommend?     Deal  name  

 

     

Pricing  „  Ensure  Profitability  on  a  Big  Deal

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Recommended  price/range   Total  profit  expected  at  this  price   Gross  margin  %  at  this  price  

           

  Comments                 Use  66-­‐K  as  your  report.  

 

Pricing  „  Ensure  Profitability  on  a  Big  Deal

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Ensure profitability on a big deal  

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