Hello and thank you for visiting my blog.
In any industry you have at least one competitor that sells similar products as you and does it at a fraction of the price.
The question every salesman has is; “why don’t they sell to every customer? They are making as many sales as I am, and doing it for a third of the prices I’m charging. How is it possible?”
The answer is that the price usually has very little to do with why the prospect says no.
If it did, we would only have companies selling low price products.
People are not willing to pay more than the perceived value of a product.
This means that someone is willing to pay twice as much for a product that is worth twice as much.
As long as your product value is lower than your price the customer will not be willing to buy your product
There are two ways of closing this gap.
The easiest is by lowering the price.
But remember the value your customers perceive your products to have is based on quality and trust. If you lower the price often the price your customers think your product has will also go down.
The second solution is to raise the perceived value of your product.
If you can convince your customer that your product is worth at least as much as you are charging they will be willing to pay for it. To do this you can tell them about different product features, describe your customer service procedures or other benefits your product has.
It is also important to show a customer why they should buy your product.
It is important that they know in what way your product will help them. If they don’t, they will never buy your product even if they agree that the price is right. The product will still have no value, to them.
If you get caught in a discussion about prices there are some things you should always remember.
Be proud of your product.
Show the customer that you think it is worth the price you are asking for and that you are selling a high quality product from a high quality firm.
Explain the value of your product.
If the customer doesn’t trust you that the product is worth the price you are asking for, explain again why it is. Go through the different features until the customer has understood them and their value.
But your competitor is cheaper?!
Ever heard this argument?
In this situation it is important not to start a price war with your competitors but to instead explain the differences and why you charge higher prices than your competitors.
Often the customer might ask you about the price even before you have presented your product. In this case whatever price you give them will be too high. They don’t know the value of your product!
A good answer to this is to say something on the lines of; “I know the price is important and I will therefore get to it in a second, but what is more important is what you will be receiving which is the following”.
This way you can present the product and raise the perceived value of it to the customer.
When and how can you lower prices?
In some cases you have no choice but to lower your prices. But if you do, it is important that you have a valid reason and that you do it in a smart fashion.
The main situations in which a price reduction is required are the following.
The customers’ budget is too small.
Sometimes the customer has to get a bargain, many people will only buy if they get a lower than average price so sometimes you have to give in.
If the customer is using a competitor and is happy with their services you might give them a trial of your product so they can see the difference for themselves.
How do you lower a price without lowering the perceived value?
It is important that you lower the price without while still being trust worthy.
There are two ways in which you can lower a price. Either by taking away a part of the product,
For example “I can give you 20% off, but in that case you will not be able to use our customer service.” Or by giving a reason for the price reduction, “I can give you 20% off, but that is only because I want you to try our product. I am confident that if you do use our product once you will want to use it again and again.”
In both techniques you keep the value of the product high. Either because you can’t give her the whole product for a lower price or by saying that you are buying his loyalty by giving him a lower price. In both situations you are asking for something back.
I hope you found this article useful and, if you have the time, would like to share some of your thoughts on the subject of price.
Thank you for visiting.
//Daniel M. Wood