In this heavily commoditised world where professional purchasers are incented to extract the lowest price, many companies spend their time reducing costs to maintain margins or even worse reduce prices and accept lower margins. There is though, an alternative, and that is to sell value, and the key word in this sentence is sell. Identifying the highest price a customer will pay may be an art form, but it is certainly not selling. This is the main difference between value being a differentiator and price being the value proposition. There is a quote I like which is “the price isn’t too high; it’s the value that’s too low”. Prospects, the people who are going to use your product or service do not buy on price, they buy on value, and the only people that can create value in front of the customer are your people. Even if you have a commodity product or service you can generate customer value as we saw in last month’s blog.
So the question for you to answer is do you sell on price, or value? To answer this just answer the next questions with a yes or no.
|Does your firm get asked to drop your price more than 50% of the time by the prospect before they will buy?|
|When you lose a deal, do prospects tell you more than 50% of the time that your price was too high?|
|On repeat sales to existing clients, do your clients hold you hostage for discounts to get add-on business?|
|Do you lead with price when presenting to a prospect?|
|Is the word “price” mentioned anywhere on your web site, advertising, sales brochures or standard sales letters to prospects?|
|Is your pricing based upon your competitors’ prices?|
|Do your people have a standard price discount they are allowed to give to a prospect without management approval to close a deal?|
If you have all or predominantly NO answers, don’t tell your competitors your secret as you are value selling. If you have lots of YES answers then keep reducing your costs and prices.
Reproduced with the permission of Koru Consulting Ltd.