Sales Tip: Combatting Price Cutting and the Real Value of a Sale

What’s the real value of what you sell? Of your expertise?

The reality is, it doesn’t actually matter what the “real value” is. What matters is, what’s the absolute, bottom-line, no-questions-asked lowest possible price you will ever sell your products and services for?

Regardless of the actual number, that’s ultimately its value to you.

I bring this up because I bumped into a link on Twitter to a blog entitled the Redhead Writing, where author Erika Napoletano talks about how too many businesses give away the “meat” of what they sell for free, then wonder why the client isn’t willing to pay more.

Be warned: the article, and much of her Web site uses language that, well, let’s just say that your typical sailor wouldn’t feel too out of place (at the risk of mixing metaphors, I realize for some of you that’s a feature, not a bug).

But in the midst of the article was this fabulous gem of wisdom:

“If you’re looking for something for free, you’re going to get a lot of 36,000 foot view information mixed with some 5,000 foot view gems. If you want ground level insight, that [crap, cow dung, poop] costs money.”

And the principle couldn’t be more accurate for high-touch B2B sales.

Why are we so willing to undercut our products and services’ value? Why are we so willing to give away our time and resources chasing after those elusive deal closes?

I know why the prospect asks for it: bargaining on price is leverage. They know it puts pressure on you, and it’s the most immediate win for them—it’s the fastest, simplest, most easily measurable way for them to minimize their cost of risk. In some cases it’s less about the actual dollar amount as it is about their own mental state—”Well, it wasn’t what I hoped, but at least I bargained for it at a good price.”

Don’t ever forget that when a prospect buys, it’s because they inherently value what you’re selling more than they value the things required to get it. The fact is, a sales transaction by its very nature ultimately generates more value for the customer than for the seller. As sellers we accept this fact because most of the time even getting the “short end of the stick” is still enough to be profitable.

Why are so many “bad clients” the most demanding? Because they know that they’re far and away getting more value than what they’re putting in to it, and they’re going to maximize that to the absolute limit.

Giving away stuff “free,” or “cheaper” is easy to do, just be aware that what you’re doing is merely increasing the relative disparity in value between you and the prospect. If you’re fine with that, by all means no one will stop you–but before you do, do some realistic thinking about what your real hard price cap is, and whether or not it’s what you really believe it should be.

Author: Ken Krogue |
Summary of Ken Krogue’s Forbes articles

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