"Your Price Is Too High!"

Don LinderHow often do you hear this phrase from your customers? Once an hour, once a day, once a week? Most sales people, when they hear "Your Price is Too High", think their customers are being truthful and respond by lowering their price. A nice simple straightforward response but fraught with danger.

What if your customer is:

  1. lying to you, hoping to negotiate a better price; OR
  2. saying that they don't see sufficient distinctive value in your product/service to justify your premium price.

Well, if your customer is (a) lying to you, and you lower your price, she may not be very happy at all. Consider the following scenario:

Your price is $12,000. Your customer says your competitor's price is $10,500. You respond, "We'll match their price!" How does your customer feel? She feels:

  1. upset she didn't say that their price is $9,500
  2. upset that you were initially trying to gouge her on price
  3. happy to get a price reduction

From the positive perspective, your customer may have all three feelings, which means you have one positive feeling and two negatives. From the negative perspective, if your customer isn't spending her own money, she may not really care about getting the price reduction and you're left with two negative feelings and one neutral feeling. In either case, you're certainly not getting a positive result from lowering your price! Even if you win this piece of business by lowering your price, you've lost! . . . both potential profit and the respect of your customer.

If the customer is (b), saying that they don't see sufficient distinctive value in your product/service to justify your premium price, you haven't done a very complete selling job and will have to compete on price to win the business. (In fact, according to a major study, 64% of the time that buyers say to you afterwards that you lost on price, they are lying.)

In order to drastically reduce the frequency of hearing "Your Price is Too High", you must ensure that your customer both recognizes and highly values your distinctiveness. Sounds like a simple concept, so let's examine the three steps you must take to get to this objective:

#1 - Understand your distinctive value.

Most companies spend enormous resources to have their sales force understand their product very well, frequently going as far as making the sales force become expert demonstrators of the product. The big problem with this approach is that you're then depending on your customer to figure out what is truly distinctive about your product and why it should be valuable to them.

To understand your distinctive value, you need to really put yourself into your customer's mind, and answer the critical question, "What's in it for me?" Once you've begun to understand distinctive value from your customer's viewpoint, try discussing your understanding with a friendly customer to verify your view, and get some suggestions from your customer.

#2 - Value your distinctive value.

This step can be pretty straight forward if you really understand your customer's business. (Unfortunately, not many of us have this level of understanding.)

Think carefully about your distinctiveness, and the potential beneficial impact (or avoidance of negative consequences) that you can have on your customer's operations. For example, if you sell a product whose distinctiveness is very high reliability, ask yourself, "What are the consequences to my customer's production of using a product with lower reliability? What is the extra profit that results from the extra production caused by my product's higher reliability?"

Once you understand the beneficial impact, developing a typical return on investment scenario is straightforward. Again, I'd suggest you ask your friendly customer to help you verify your analysis.

#3 - Get your customer to recognize and value your distinctive value.

Just as you were thinking "those first two steps were easy, we're almost done", we get to the difficult step. Your understanding and valuation of your distinctive value is nice, but not terribly important unless your customer believes it!

Many sales people believe that the solution to having their customer believe them is simple ­ "I'll just tell them, and tell them, and tell them again!!" - until they believe me. Human nature being human nature, this approach doesn't work very well. We all instinctively realize that we believe much more strongly what we say than what others (particularly sales people) say to us.

Our successful approach to this critical step is a method we call "Intelligent Questioning", a method that causes your customer to come to the correct beliefs regarding your distinctive value on their own, with some guidance by yourself.

Unfortunately, "Intelligent Questioning" requires a difficult discipline for many sales people ­ they must learn to listen and not do most of the talking. In fact, we recommend a goal for sales calls of having your customer talk 80% of the time, and you (the sales rep) talk 20% of the time.

Let's be honest . . . resisting the great temptation of reducing your price to get the order is very difficult. If you can master the three steps that I've described, you'll achieve a profitable sale. The benefits that you will achieve from reducing the frequency of hearing "Your Price is Too High" are:

  • Improved customer relationships
  • A higher success rate
  • Increased profits


Don Linder, the founder of Major Client Selling, uses structured tools and creative strategies to solve the complex puzzle of selling to big customers. He's the author of "The Seven Deadly Mistakes that Cause You to Lose Large Sales." You can reach Don at don_linder@majorclients.com.


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