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Dell Streamlines Pricing Structure

Updated from 12:12 p.m. EDT

Under siege from rivals such as Hewlett-Packard (HPQ), Dell (DELL) is trying to make itself a more customer-friendly place.

As part of that effort, the giant PC maker plans to largely replace its plethora of promotions and rebates with generally lower list prices, said Ro Parra, senior vice president of Dell's home and small-business group, on a conference call Thursday. The company is also extending the warranties on its computers and expanding what's covered, Parra said.

The moves follow the company's previously announced $100 million effort to bulk up and retrain its customer support staff to better handle inquiries and reduce phone hold times.

"It became increasingly clear that a simple pricing and sales structure would make it easier for customers," Parra said in a statement "We'll continue to offer customers the best value every day with excellent support."

He added on the call that Dell is "pleased with the early results" of its customer-service moves.

As part of the moves announced Thursday, which Dell previewed earlier this week, the company plans over a period of 12 to 18 months to reduce by 70% the number of promotions per product line and by 80% the number of promotions it offers on individual products. The company plans to implement the program beginning in August with its televisions and Inspiron notebook computers.

Rather than making an immediate cut in its promotional programs, Dell felt a long implementation time would be simpler for its customers, Parra said.

"We're making some pretty dramatic changes," he said. "We want to do it right."

The moves will have little effect on the ultimate price that most consumers and small businesses pay for Dell products, Parra said. But they should make the buying process more transparent and less complex, he said.

To view Farnoosh Torabi video take on Dell's new pricing strategy 7/13/2006 3:01 PM , click here .
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