Of all the topics in sales, few are as talked-about as pricing and negotiation. Yet, with all that talk, few businesspeople are truly happy with the price points they are getting. Why?
The problem is that we’re our own worst enemies. We don’t really understand price, or what happens in a customer’s mind when price is quoted. This is a problem because sales is a sport that’s played inside the customer’s head. And if you can’t even find the arena, the chances are that you’re not going to win the game.
When you find out that the customer has been quoted a lower price than yours, what is your first thought? Perhaps that you have to ‘justify’ your higher price? Maybe you’re right….but not that often. The truth is that when the customer receives multiple quotes, one of which is significantly lower, the low price provider must justify his quality. This flips conventional thinking on its head, but it’s true. The presumption of quality always goes to the higher price.
Think about the last time that you went to buy, say, a suit. You looked at several suits, and the price points might have ranged anywhere from $400 to $1500. Which suits did you presume were of higher quality? The $1500 suit, right? But, let’s suppose you could only afford, or were only willing to buy, a $600 suit. Knowing that the $1500 suit was of the top quality, your mental processes shift. Now what you’re really wanting to know is how much of the $1500 suit’s quality can be found in the $600 suit.
It works the same way with any item. The higher price product or service gets to set the standard of quality in the customer’s mind. From that point forward, the only question is whether the customer’s perception of value for dollar is better with the lowest price product. That means that salespeople who sell higher-priced products should be proud of their price, not defensive. Of course, that’s the opposite of the way most salespeople sell – most salespeople are scared to death of their price.
Words and phrases that salespeople (in any industry) use to try to get business, but end up cutting their own throats:
- “I can save you money on…”
- “I’ll give you the best deal around…”
- “Can I bid on your business?”
- “I want the last shot at the price…”
- “If you find a lower price, call me…”
If you use any of these words or phrases, you are doing nothing more than asking the customer for permission to cut your price! In fact, you are telling them that the price you’ve just given doesn’t mean anything, and if they keep hammering on you, they can get a lower price. Why?
Because we are scared to death of losing the business. All these words and phrases are a defensive strategy. We’re afraid that our competitors will out-sell or out-price us, so we’re going to set up a safety net for us. We won’t lose an order on price, right? Wrong.
When you promise to save your customer money (or other nonsense), you always fulfill your promise. Rarely, however, do you get the business. Salespeople believe that they can “win” business by being cheaper. It’s a lazy way to sell, because all you have to do is make a stroke of a pen. The trouble is that, when you give a customer your “bottom” price, they still end up doing business with the person that they liked the best and who showed them the best offering – whether that was you or not.
In any selling process, there is a moment in time where the customer is ready to buy, and excited to buy. We need to take advantage of that moment in time. Here’s How!
Don’t say stupid stuff. Remember those phrases we talked about earlier? Don’t use ‘em.
Above all, never say the word “bid.” The word “bid” always implies multiple sources, and lowest-price-wins. It also implies delaying the buying decision until all the bids are in. Instead, offer proposals.
Keep it simple. The more whiz-bangs, colored lights, and brass bands you put into your proposal, the more the customer worries about being overpriced.
Standardize your pricing as much as possible. The best is the advertising rate card – “buy more, pay less.”
Make sure to focus on what the customer wants. Another characteristic of “bid” selling is that the salesperson goes right past the earlier parts of selling, and right to the pricing part.
Don’t start with an unrealistic price. When you start out with an artificially high price (such as the new car sticker price), you invite price negotiation. This is when both customer and salesperson are motivated by fear, and it removes all selling momentum.
When the customer asks, “how much,” answer them. For some reason, salespeople are scared to death of that question. Don’t be. The more words you use between “how much” and “this much,” the lower the expectations of the customer. That’s because they know you’re scared of your price.
The best, all-time greatest, way to hold your price is: Don’t be afraid to walk away from the deal. If you “have to have this business,” the customer has the advantage. If, on the other hand, you don’t “have to have” the business, you have the advantage.
If you are afraid of your price, your customers will know it, and they will take advantage of it.
