Conference 7.286::digital

If this is something new and you would like "ordinary" people to respond to
it, I suggest you describe it.

    Quite frankly, I've never heard of it.

    I suspect that you're referring to the new pricing policies that will
    be announced on 10 November. This is tightly held information. A leak
    of this information got to the Boston Globe. It is my understanding
    that this information is Digital Confidential but will be disclosed
    internally on 02 November and be reflected in the appropriate Price
    files. This is a complete revamp of our pricing policies to ensure
    competitive pricing, to reduce or eliminate discounting and allowances,
    and to facilitate doing business with Digital. I, for one, do not know
    the specifics and those who do aren't talking. Next week all will be
    revealed.    

    re: .3
    
    I've had the October 16 Sales Update on my desk for a week or so.  It
    seems to have the pricing in it.
    
    Bob

    If this is the program that lists current prices for Digital
    products, I have used it once and found it a cranky and unrealiable
    system.  Not very user friendly.
    

Ref the change where we used to have a "list price", but EVERYBODY was
given discounts to a slightly better rate, to make them feel better.
This is changing to a flat price, obviously dropped, and no discounts.

Logically, it is a great idea, and should have been done a long time ago.

Practically, these are customers with their own metrics which drive the
purchasing departments in directions which may or may not have anything to do
with "logic".

For example, at my customer, the behavior of their purchasing departments
indicates that they are rewarded based on the magnitude of the discount they
get from the vendor rather than on the bottom-line price.  i.e. If we quote
them $X, they frown.  If we quote them $2X and give them a 30% discount,
(note that this is now $1.4X), they're much happier.

Kevin

    Very interesting comments so far.  Someone had the right idea.  It's in
    the Sales Update dated October 19.  In addition, there was a customer
    DVN last Friday, October 23 explaining the whole new pricing program. 
    One of my customers even has a copy of the pricing addendum that is
    supposed to be out on November 2, the date these new prices go into
    effect.  Not sure where he got a copy, our local office doesn't have
    them yet.  But, anyway, it's pretty much public knowledge that Digital
    has presented of and on to the customers.  We had a sales meeting back
    in January, and it was presented to us that this was going to happen
    and to slowly start discussing it with our customers so that htey would
    be ready for it.
    
    Over all, for those of you not in sales, or not privy to the
    information, Digital is going to a commodity based price for items such
    as terminals, disks, memory, printers, and low end network products. 
    Pretty much like our PC pricing strategy.  A 'street price' with little
    or no discount as opposed to a higher 'list' price with a 15%-40%
    discount to customers.
    
    I'll post just one example to show you what's happening:
    
    		old price	new price
    LN07-CA	$1,599		 $949
    
    BUT,
    
    the price stays the same with no other discounts. The end users used to
    get a discount based on their Digital Business Agreement depending upon
    how much business they did with Digital.  Now the only discount they
    get is if they purchase more than 5 of the above printers.
    
    Over all, I think the end users like the program, but the channels
    partners are losing their margins because their discounts have been
    reduced.
    
    For more information, please see the October 19 Sales Update.  It
    explains the new Business Practices.
    
    Regards,
    
    Tom
    

Purchasing Dept metrics aside, I think this is a big step forward for
Digital. Holding prices high and giving high discounts+allowances means
that our products are attractive only to a shrinking "major customer" base.
The program should give current end users similar prices while attracting
a wider audience as well.

The main downside is that we have to curb allowances dramatically or we're
into an "out of business" scenario very quickly. I know the pilot in Germany
with selected NaC products didn't see a meaningful change in allowance
behaviour - so this is being reinforced very heavily in the roll-out here!

On the reseller side, I don't think things are too bad. Again, there is a
natural behaviour to sell "high margin" products, but you tend to find
each tier of distribution in a competitive market will normalise to taking
5-10% gross margins, whatever you offer. In the case of Lotus and Microsoft
here, distributors margin is actually less than this - 2% gm - ie: the size
of their manufacturer's co-op fund.

As long as your channels can see money ending up in their pockets through
seeing healthy volumes travelling through them - they'll be fairly happy.
The challenge now is to drive a significant increase in volume!

								- Ian W.

Well, since I'm in the middle of doing quotes for a number of the "comoditized"
items, I'd have to say that this whole thing is making my job a good deal 
harder. First of all, AQS is not anywhere near ready to go with the right 
prices (they were supposed to take effect 11/2, right?! Well, I spent most of 
the afternoon in AQS overriding the WRONG AQS prices).

Now add to that the fact that customers expect their DBA and a non-trivial 
allowance, and we've got some explaining to do. Since we'll be in competition 
with other vendors, I can only hope that our NEW pricing does indeed make us 
competitive. If not, then here come the allowances again and what have we 
accomplished? Probably making less margin, due to the lack of psychological 
perception that customer is getting LARGE discounts.

After we get over the obligatory painful transition to the new business 
practices, I think things will be better. I just hope we don't piss off too 
many customer while we get our act together.

Regards,

Jim Mickol
Sales Support
Rochester, NY

    
    
      I work on the remote sales hotline and have had several complaints
    from sales reps because the dba does not apply, the new prices make
    our products more expensive than before. We may lose more business over
    this.
    
    PKB