Dell Streamlines Pricing Structure
One of the problems with all of the promotions going on now is that customers feel like they never really know if they're getting the best price, he said. The new system should be much more transparent, he said.
In addition to reducing promotions, the company also plans to decrease the number of rebates it offers on its products and to move from a system of mail-in rebates to allowing customers to electronically file for them.
Dell is making changes not just to its pricing policies, but to the warranties it offers, Parra said. The company is extending the warranty coverage on its computers from 90 days to a year. What's more, the warranty will now cover any operating-system issues customers may have, he said.
The company reduced its warranty coverage from one year to 90 days and stopped covering operating-system problems in the recent past, Parra said. Both moves were a "mistake," he said.The customer-service efforts follow Dell's recently disappointing financial results and its loss of market share to rivals such as H-P. Dell already cut prices in May in an attempt to try to maintain sales. Dell's pricing move echoes a trend in the auto industry where many dealers have moved away from negotiating new car prices with each customer to a model of a lower fixed price for cars, dubbed "no-haggle pricing." While some auto dealers have been able to boost sales over the long-term with such pricing schemes, many have found the shift to be disruptive as competitors lure away customers promising sweeter deals. But Parra indicated that Dell didn't expect similar disruptions. Investors seemed to shrug off the announcement. In recent trading, Dell shares were off 11 cents, or less than 1%, to $22.27.
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