“If you can cut the price today, you’ve been charging too much all along.”
Isn’t that what customers think when you lower the price without changing your package in some fashion to justify reducing the price? Or, they might think: “Just how much were you trying to make on this sale?”
I was talking to a friend yesterday, coaching him on how to hold the line on his pricing. He sells a value-added solution and should be paid for what he offers. He did everything right to sell the value, but the customer was locked in. You know how that feels.
He was getting pressure only because the decision maker didn’t want to spend that much, not because there wasn’t the perceived value in the solution. I suggested he change the package to justify changing the price. The new solution would satisfy the buyer’s needs and meet his budget expectations. It isn’t the ideal solution but it works. It’s the customer’s choice at this point.
He called today to tell me that the customer bought the cheaper package. No surprise. The surprise came when the customer said: “I like this idea. It shows the integrity in your pricing.” The customer appreciated that my friend didn’t just cut the price–he changed the package to charge less. Guess who has credibility in the future when selling to this customer?
So, the next time you think about cutting your price without changing anything about your offer, remember what this customer said about pricing integrity. Let your competition create doubt about their integrity. It will make your job easier next time around.
Is price the primary way to sell?
Is price the only thing your buyer cares about? Is price the primary way you sell? Is a cheap price the basis for your long-term sales strategy?
Consider this. If you believe that a cheap price is the best way to go, you are diminishing the value of your company’s value added. If you compete mostly on price, you’re telling the buyer that the most important reason to own your product is because it’s cheap. And if you sell on price alone, you are ignoring the value you personally bring to the table. Effectively, you’ve said: “We can’t compete on product integrity; our company isn’t any better than the competition; and I’m not special.”
Unless your company is built on operational-efficiency, like Wal-Mart or Southwest Airlines, price is not the most effective way to compete. There will always be a competitor that can and will sell cheaper than you. You must study all of those “non-price” reasons why someone should choose your alternative. In the words of a young salesman I know, “Since I can’t cut my price, I spend all of my time trying to figure our ways to deliver greater value to our customers.” Then, the salesperson spends time trying to figure out ways to tell his story better than the competitor.
Anyone can sell at a low price. You need no skill, other than the ability to read a price list, to do this. It takes skill and will to hold the line on your prices when things get tough.
Tom Reilly is the author of Value-Added Selling and Customer Service and Crush Price Objections is more than a department: It’s an attitude! Reilly is also a professional speaker and you may reach him through his Web site: www.TomReillyTraining.com.