Price versus Value. This is a regular discussion with our B2B and B2C sales training clients in Vancouver, Edmonton, Calgary and Toronto. So many buyers seem to be obsessed with PRICE. “If you want my business, you’d better have the lowest PRICE.” I laugh every time I hear a buyer say that. If price was truly the only motivator in making a buying decision, consider how many people arrive at the office on Monday bragging about the great deal they got on a piece of junk.
PRICE – My Personal Lesson
The best lesson I learned on price versus value occurred decades ago. When I was a college student I needed a desk. Being short of cash like many young people starting out, I decided to look at the least expensive alternative – a particle board computer desk. After spending $150, I thought I was a pretty smart guy. After all, I had a great looking desk that even had an adjoining piece for a printer.
One week into the new purchase, I stupidly decided to sit on the printer shelf and quickly broke it. After a few choice words, and another trip to the store, I paid $300 for an authentic wooden desk. What did this experience cost me? $450 and a bill for someone to haul the particleboard desk to the dump.
Which desk was more expensive?
If you answered the particleboard desk, you know where I’m going. The first desk lasted one week. The second lasted for years and I later resold it for a few bucks.
PRICE Is What You Pay – VALUE is What You Get
Think about it. No one buys on price alone. NO ONE. If a buyer tells you that, they’re simply doing their job in negotiating. While buyers will tell you PRICE is what they’re looking for, it’s really VALUE that attracts them. Shrewd negotiators will tell you that they want BOTH. The lowest possible price for the best quality product with great service.
Believe it or not, your loyal customers want you to make a profit. That allows you to stay in business to actually service the products you sell. Claiming you offer the lowest prices for the best quality and service is a promise you cannot afford to keep on a consistent basis. It’s a race to bankruptcy.
Price Versus Value Definition
When PRICE exceeds perceived VALUE, there will be no sale made. It’s too expensive and not worth it. Sound familiar? When perceived VALUE is greater than PRICE, a sale is made. Bang for buck and a great deal puts a smile on your buyer’s face. The only exception to this rule involves budgeting. If the PRICE is greater than the amount of money the customer can afford to pay then no sale occurs regardless of VALUE. Budgeting can definitely be a factor.
It’s worth noting though that every budget has a small amount of wiggle room, don’t be afraid to go a touch above the budget. Don’t make the mistake of going there without the buyer’s consent. Ask them the question “If I could show you something slightly above your budget that I think you’ll appreciate, would you want to look at it?”
Option #1 – Lower the PRICE
The sales transaction completes and you are forced to sell the product or service for a decreased profit margin. In some cases, a greatly decreased profit margin. Your company’s operating costs always go up, so it has no choice to slash expenses like advertising, pay increases, renovations or internal improvements. This creates less store and website traffic, poor employee morale and is a losing long term business proposition.
Option #2 – The Better Option is to Increase VALUE
VALUE is what the customer perceives. Their perception is their current state of reality. Increasing the VALUE through true incentives that motivate people to buy can actually build brand equity. It’s easy to see how many brands can actually charge a premium because of their high perceived value relative to price. Look to find a value-add with a product or service that carries weight in the eyes of the customer.
For example, a furniture store client of mine years ago offered its customers free repairs on its high-end sofa line. They would visit your home, repair your chair or sofa for surface wear and tear. If required, they would even pick it up, take it to their store, and repair it. All of this was done FREE OF CHARGE! The family-run furniture store did this because they were great operators and wanted to stand behind their product for years to come.
Instead of lowering the price, why not give buyers well-perceived value-added with a low cost to the company?
What About You – The Salesperson?
Always remember. The product is not the product. It’s the experience of buying the product. As a salesperson are you adding perceived value? Are you asking questions, providing solutions to problems and exceeding the needs of potential customers? Do you know as much about the product as the educated internet-savvy customer does? Many people will pay a slight premium to find a knowledgeable salesperson who’s interested in repeat business and referrals by earning them.
Price versus Value – How to Deal with this Classic Buyer
“I can buy the same product you sell from your competitor for much less.” How many times have you heard this line? You will love hearing it again with this response…
Salesperson: “The same product?”
Buyer: “Yeah, pretty much.”
Salesperson: “For much less?”
Buyer: “Way less, I’d say 25% less.”
Salesperson: “Really?” Please don’t call their bluff and ask to see their quote/proposal/email. You’re basically calling your buyer a liar. You may win the battle and lose the war.
Salesperson: “Then I suggest you buy 10, 1 for you and I’ll buy the 0ther 9 from you.” Smile when saying this.
Don’t blame your buyer for negotiating. He or she is doing their job. Do yours and respond with a sense of command, humor, tact, and diplomacy. Have some fun in this situation.
Handling price objections is one of the areas we focus on in our online course The Sales Skills Incubator for $199 CAD including tax. We’re also in the final stages of producing our latest online sales training course, Negotiating 2 Party Payoffs. Every great Salesperson wants to learn the skills of being a great negotiator. If you wish to be notified when the course is launched or future sales ensure that you are signed up to receive the PROSALESGUY BLOG by email. If you prefer reading, check out our book SHUT UP! Stop Talking and Start Making Money available on Amazon.
If you are a Sales Manager interested in Group and Individual Sales Training in Vancouver, Edmonton, Calgary or Toronto please give us a call or send us an email. We’d love to speak with you.
Dave Warawa – PROSALESGUY