The Truth About Price
“Price is a factor, Price is always a factor”. Not sure who said those ominous words first but as much as we don’t want to believe it they are true…but only to a point. Price is always part of the equation just like in most business concerns about shrinking profit margins and rising expenses is a reality that the talented overcome while the masses just resign themselves to selling for less and having to sell much more year after year to keep the income level the same. A client base built over time and healthy prospecting is part of the answer to the problem but so is maximizing each and every opportunity.
How? Glad you asked. First you most likely aren’t the cheapest, chances are you don’t have the largest market share? Sound about right. Doesn’t matter where I’ve been or what I’ve sold there was always a part of the sales force that had that perception. Usually the part of the sales force whose numbers where not where they wanted them to be.
Price, while always being part of the issue, is rarely the entire issue unless you did something stupid like led with price. If you lead with price to get in the door that will lead to a few things
1) the inability to focus on things of value other than price because you made a promise of “saving them money”. We can’t tell you how many times in the history of sales that the cheapest price didn’t win. Why? Because most of us aren’t selling groceries. Who cares what Banana’s are selling for down the street? What we are doing is solving problems, helping business feel secure, enhancing customers or life’s satisfaction. Does it come in the form of a sale? We’ll argue that it comes from someone buying. When a person or company buys something of value whether routine or life altering, they are agreeing to the price but they are also expecting everything else that you and your company has to offer. They are not just buying price they are buying delivery and quality and a lot more. They are, in a way, buying you.
2) you are engaged with someone who is focused on a task. i.e. buying as cheaply as possible more often than not the are a lower level person, sure the folks at the top worry about cost but notice I said cost and not price. Price is only a factor as it relates to cost.
So where does cost really come into play
Look at the terms of the deal. Have you given them an advantage beyond price that is real and tangible but not evident on a line of the quote. Never give something away. It only dimishes the value. If you offer free tech support for the first year on your product put it in as a line item and then counter it with a loyalty discount of some type equal to the value. Let them see what it’s worth. Say your competition charges freight in a deal and you don’t. There is a value to that beyond price.
Is you product longer lasting and ranked higher than the competitions for quality by a third party source. It’s a delicate conversation but one that needs to be had because down time and lost productivity relates directly to cost. The conversation might go something like “well sure Ms. Customer’s widget is lower in the upfront pricing but have you considered that their published failure rate is one every 36 months with an average down time of four hours and ours is once every 60 months for two hours. You’d have to determine what that lost productivity is worth but id it is 3,000 per hour then ….)
Ever own a Mercedes? If you have and you’ve used their warranty services you get a great idea of what a premium is put on service. They will come to where you are and fix your problem. They provide you with a loaner car or at the very least a ride and if you’re traveling they pay for lodging and a loaner or rental if the car is going to be down for any length of time including getting it where you are going as soon as it is fixed. That service comes at a premium price. Your service should also. Think of yourself as a high end vehicle, sure your can get some where else in a car that is the fraction of the price but can you get that same level of service?
Price alone will not grow a business or sustain in. Being able to articulate true value into the cost of the item or service will grow and sustain a business. So step back. Look at your offer. Ask questions! Find out why the price of an item is so important to the person asking. Perhaps the person asking for the price is compensated based on getting the lowest price. This is true in many corporate purchasing departments. You need to have buy-in on your product or service from multiple levels within the company. If you’re only working with the purchasing department, you’re not “in” the account! You need to have relationships at multiple levels of the company that you’re selling to. Without this, you’ll never win! Does your manager know the manager of the company that you’re selling to? Does your vice president know the vice president at the company you’re selling to? Do you know the sales manager at the company? Become a partner to the company you’re selling to. Become an extension of them. Show them your value day in and day out. If you’re doing a good job a providing value, and you know all of the key decision makers with the company and you’re persistent, then your value will ultimately shine through and you’ll win. Till that happens, it’s all about price.
