Dell To Simplify Pricing, End Some Promotions

The Round Rock, Texas-based computer maker said last week it will "make buying easier and improve the overall customer experience" by ending the complex and constantly changing pricing promotions tied to its Dimension desktops and Inspiron notebooks. The strategy will not impact pricing in Dell's enterprise businesses, an executive said.

On the consumer and small-business end, though, the end result is that Dell's list prices will fall over time and many of its promotions —including the bundling of free hardware with systems —will come to an end.

"This is not about lowering or raising prices," said Ro Parra, Dell's senior vice president and general manager of the company's Home and Small Business Group.

"This is about taking out the complexity in the pricing we offer our customers. Over time, we'll be compressing list pricing," Parra said. "We'll provide far more transparency than the heavily promotional environment we have today."

The net result of Dell's announcement is that, over the next 12 to 18 months, the company will cut the number of promotions per product line by about 70 percent, and the number of promotions tied to a single product by 80 percent, Parra said. Dell will also begin migrating its paper mail-in rebate programs to an electronic rebate-filing system.

Parra also said Dell will increase warranties on its Inspiron notebooks and Dimension desktops from 90 days to one year, and once again will include support for operating system issues as part of its hardware warranties. Neither Dell nor channel executives indicated the changes would alter Dell's strategy to become hyperaggressive on pricing when necessary.

"They don't know what else to do," said David Chang, president of Agama Systems, a Houston-based system builder. Chang said that when it comes to deals Dell wants to win, in competitive engagements he believes the company will still be as aggressive as ever.