Be Direct... and End the Pricing Games (please!)

310 points posted to Sales Strategies by dixonmiller 03/01/07

It is amazing how many different ways Dell tries to sell the exact same PC to customers at different prices. PLEASE adopt one simple, logical and consistent pricing system for consumers and small business purchases. (Note enterprise purchases are a different animal, but would also benefit from simpler pricing).

For an example of how confusing Dell's pricing policies are please see the spreadsheets posted online at:
http://dixonmiller.blogspot.com/2007/02/dells-dizzying-deals.html

A BETTER APPROACH:
Take Dell's cost of components, add in a reasonable mark-up, and base your pricing on that. Of course, you don't have to communicate the calculations to customers, but customers should expect that prices are consistent from one day to the next and from one part of Dell's website to the next. If I price out a system for $1000 today, I don't want to see it for $970 tomorrow, and $1065 the next day, or because I clicked on a different link on Dell's website. These price inconsistencies only a) confuse customers, b) make customers who paid more feel cheated and c) condition customers to bargain hunt, wasting their time and eventually only buying a PC from Dell at a later time and at a lower price (which hurts Dell) or from another manufacturer all together (see HP).

THE BROKEN CURRENT APPROACH
Here are a few of the tactics Dell uses that for the most part only serve to confuse and I would even say mislead customers. Stop these tactics!

-- Dell sells computers through both a Home/Home Office and a Small Business site. However, anyone (a consumer, company, etc) can buy from either site. (This is fine, but the problems start from here).

-- Pricing and even naming can differ between the sites for the same PC. Dell sells several Dimension Desktop PCs on both sites (E521, E520, C521). However, Dell also sells two other desktop PCs on each site, but under different names. The XPS 410 on the Home site is the same PC as the Dimension 9200 on the Small Biz site, and the Home site's XPS210 is the same PC as the Small Biz site's 9200C. Most importantly pricing can vary across these sites, even if you configure identical PCs.

-- Dell offers multiple prices and configs for the same PC even within the same site. Say you want to buy a Dimension E520 from the Home site. You will find different configurations and prices depending whether you click on the links for Dell's Desktop page, Smart Values page, or View All Promotions page.

-- Bundling provides even more options. Even within Dell's Desktop Page (which is where 90+% of people will go for a new desktop)there will be usually 3-4 configurations for a PC like the E520 with different bundlings for warranty, memory, processor, monitor, etc. I understand trying to give preset configurations with catchy names like "Elevate your Experience" and "Ready to Perform" to help consumers choose a simple package that works for them, however it's still very difficult to understand the differences between the bundles.

-- Upgrade options can vary even for the same PC. Again say you want a E520. Depending on which site and link you use to configure this PC, you may see anywhere from 2-5 processor choices, 3-4 hard drive choices, 1-3 video card choices, etc, and some options may not be available at all (especially on the Small Biz site).

-- Dell offers promotions via coupons that you won't find on its site. These can be for up to 25% off or even something like $500 off a $1500 PC. The only way for real people to find these deals is to patiently track deal sites like bensbargains.net, techbargains.com, or fatwallet.com. Search on "Dell deals" on google to find a number of these sites. Also, these coupons usually only last for a few days, have a limited number of redemptions (such as 1000 or 4000), and having cryptic codes like P$QZPQHMJPZN3J.

I hope that's enough to get my point across without overwhelming everyone.

THE BOTTOM LINE
Set straightforward, cost plus pricing for consumers and small businesses and you will have more satisfied customers.

C'mon Dell, clean up your pricing! For the most part your customers love your products, they just hate the way you do business.