What is the impact of 10 percent price cut on your Profits?

Recently, I have noticed a number of b2b sales people and sales managers at these companies cutting prices on their products and services. Interesting pricing strategy in view of the reality of what it takes to make up the cut in gross margins.

The usually justification for the these “innocent” price cuts is the recession has made it difficult to sell at higher prices or we need to cover our costs during this low volume period of time or the internet has made it harder to sell without cutting our prices.

Interesting justifications with no basis of reality provided with these “excuses” for a lack of selling skills.

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Starting Point is Understanding Sales Growth

In Developing Your B2B Sales it is very important to understand Business Acumen. Since it will be a key topic, I will begin with a basic discussion point: Sales Growth. This has become the top subject in many offices and board rooms due to the recessional impact by the economy. Every executive is focused upon increasing revenues. It has become the number one thing keeping them awake at night. While I will discuss this point, I want to share the balanced approach to looking at Sales Growth – since their are companies that are still growing even in this economy.

Sales Growth is one of the first things you should be looking at to understand the culture within the company. There are three variables for you to consider when reviewing growth. First, you can have growth; Second, you can have a declining sales trend; and Third, you can have no growth or no change in sales volume. The key is watch the trends. One year is never enough to assess the progress of a companies sales. Several years of sales (Five years is best, three is a minimum and for large public companies – 10 years) One of the best sources for public company data can be found in Yahoo Finance.

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