Some things about Price

Let's not go into a broad discussion about price/value. It's really the topic of the decade, but we would all fall asleep pretty quickly. Instead, let's think about something rarely discussed. Elasticity of price at the channel.

Elasticity of price at the channel - is a complex but very relevant issue for both direct and indirect sales channel organizations. With indirect sales, a problem can quickly occur when an advertised price and response communication is widely distributed - and demand exceeds capacity. The item advertised becomes overkill, customers lose trust and recovery can be difficult for the company.

With direct sales, if price is lowered, or discount programs are offered, extra sales capacity must be added to allow for either:

• increased demand, or,
• the need for more orders written by sales to meet top line goals with a lower price

the impact to a sales channel can be devastating. Special considerations must be made to allow for volume.