Deal desks are exciting and high-energy, important functions in many companies.

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They are high-octane, high-agency, high executive attention.

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The work of brokering deals between Sales, Finance, Product, and Legal to create big, elaborate wins seems not only meaningful but deeply necessary.

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Deal desks are also an institutionalised form of what I call 'Failure Work'.

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Failure work is "Work that needs to happen because other work either failed to happen or failed to happen well enough".

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Deal desks handle two types of failure

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Failure 1: Bad pricing

The primary failure is that the pricing and packaging don't really work and it is necessary for Sales to get creative. This 'creative' then creates a lot of downstream issues: new contract amendments, pulling features out of a solution, adjustment to a billing flow.

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To solve this organisations set up a 'Deal Desk' to manage the chaos. The deal desk's job becomes to run 'up' and 'down' the stream from sales through product, legal, finance etc. and ensure that the deal that sales closes is not 'too disruptive'. It's a form of institutionalised compromise that tries to reduce the amount of commercial debt is being taken on to close the deal (commercial debt being the load of variance and exceptions across deals that creates operational load).

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Failure 2: Revenue FOMO

Even with decent pricing some organisations seem to add complexity to deals to not 'leave money on the table'. If a customer could be closed at a 100 inside the framework some sales leaders (and some founders) will 2x the complexity of the deal to push the price to 120.

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Short term, this can seem like a win: you add $12M of revenue that year instead of $10M. That is great... but this is assuming that you are starved for pipeline. Often adding those extra $2M means deprioritising other deals, so that you would have ended up with the same $12M if you had just kept to the model.

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And even if this is not the case and you truly added +$2M of new revenue by 'squeezing' the dealflow, you are now in the situation that you need to renew $12M of bespoke, complex deals instead of $10M of standard deals next year.

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Rule of thumb is that renewing a pricing on standard deal is 10% of original CAC, while renewing pricing on a non-standard deal is closer to 50%.

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So adding that extra $2M can 5x your renewal load.

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After just 3-5 years this compounds massively (Salesforce spends $13B in CAC to add just +$2-3B in new revenue.. the rest is spent renewing the $41B revenue base).

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So if you have a deal desk... just ask yourself 'why?'.

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Pragmatically if your ACV is +$1M and you are truly getting to scale by adding up a few hundred unique snowflake customers... you probably need a deal desk (although: why not just call this 'Sales' and have this function sell both to customers and also broker the deal internally?).

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But for the other 99% of you out there: your deal desk might feel 'necessary' and even, at times, like the most heroic and critical part of your organisation... but it's probably just fixing problems you shouldn't have in the first place.

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As promised: a point about pricing every Monday. ​

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