The price menu

A few months ago, I wanted to upgrade my laptop, so I started looking for alternatives. After extensive research online, I decided on one of the most recognized brands, which only sells through its website and a free customer service line. The model I liked had a total price, including accessories, of five million pesos. Just before placing my online order, a colleague told me that if I purchased through the customer service line, I could get better prices than those on the website. He told me how a friend had obtained a huge discount by negotiating with the advisor over the phone. I couldn’t believe it. How could one of the world’s largest computer manufacturers allow “bargaining” over the phone?

The Experience
I decided to find out personally. I called the free line, described the laptop I wanted, and was offered the same model at the same price as on the website. I told the advisor I didn’t have that much money. He asked how much I had, and I said four million pesos. Immediately, he offered me a model within my budget, but it didn’t have the features I wanted (obviously: lower price, lower value!). That was fine. However, I insisted on the first model at the second model’s price. Without much effort, the advisor said he would check with his supervisor. To my surprise, a few seconds later, he said I had been authorized for a 20% discount on the first model if I bought immediately. Just minutes of “bargaining” yielded a one-million-peso discount. And the truth is, I would have been willing to pay the original price anyway. Whether I bought it or not is another story.

The Price Menu
One could say this computer manufacturer has a good price menu, but they don’t enforce it. But what is a price menu? Simply put, it’s “a list of offers, their respective prices, and the conditions to obtain them.” Yet, listing prices and conditions alone isn’t enough to guarantee its effectiveness. A price menu must meet two requirements: (1) prices must be proportional to the value offered in each, and (2) conditions must not be negotiable. If a client isn’t willing to pay the price of an offer due to budget, they should be willing to accept less value for a lower-priced option. Most importantly, the salesperson must adhere to this policy, because if they allow negotiations, clients will realize they can get better deals, inevitably destroying business value and the category overall.

Designing and enforcing price menus is relatively normal in mass markets, where negotiating prices is increasingly rare and mostly limited to informal commerce. However, it’s still common to find B2B suppliers that, despite having pricing policies, don’t enforce them through their salespeople. This practice severely impacts a business’s financial health.

The Absence of a Price Menu in B2B Markets
For example, a leading construction materials company, though not offering the lowest prices, enjoyed good market share due to technical superiority and excellent customer service. Over time, however, the company began losing market share due to aggressive price wars among smaller competitors. Although discounts for volume and early payment existed, the company traditionally had a non-negotiable pricing policy. A leadership change reversed this. Sales executives were authorized to offer “special” discounts when a deal was at risk, as long as it was profitable. This move boosted sales and market share immediately. But soon, clients realized some were paying more for the same quality and service than others who negotiated better. The result was disastrous: loyal clients began requesting bids for all purchases, seeking the lowest prices. This not only reduced the company’s average prices but also affected the entire category.

In Summary...
Creating and enforcing fixed pricing policies through a price menu prevents scenarios like the one above, where “good” clients are incentivized to become “difficult” clients. A systematic price menu helps companies maintain business and category value while generating enormous operational savings by reducing the need to evaluate exceptions. Anyone who has experienced the absence of pricing policies in industrial markets has likely witnessed the massive operational burden of financially evaluating each exception raised by sales executives.

Designing a good price menu is no easy task. It may take considerable time to structure a menu that effectively segments customers by price sensitivity and aligns with the market reality. Whenever there are signs that pricing policies aren’t working or that price levels are no longer competitive, offers, prices, and conditions must be reviewed and adjusted—but never, ever, make exceptions for difficult clients.