Who in sales hasn’t heard these words?
Buyers have many ways of saying your price is too high:
- “We are reducing down to only two suppliers. If you want to be one of them, you’ll need to sharpen your pencil.”
- “I don’t care about service, delivery or quality. Price is all that is important.”
- “My guys sell what the customers want. They don’t see the difference.”
- “I need an incentive to cut off a long-term vendor. You must be lower if you want me to do so.”
Remember, it is the buyer’s job to discount your value, while simultaneously securing it.
The forgotten elements of price that are part of your value
Most everyone thinks of the invoice price and terms.
But these forgotten values of price are part of the total picture that you must paint for your merchant.
In other words, this is part of the value you are bringing, not just a price.
- Growth rebates
- Promotional allowances
- Show specials
- Special buys
- Advertising allowances
- Co-op plans
- Pallet configurations
- Price protection
- Pick-up allowances
- Guaranteed service cycles
- Merchandising allowances
- Stocking allowances
- Customer accommodations
- Inventory consignment
And more that are unique to your industry.
Each of these elements makes up your pricing – and your value – to the buyer. Don’t forget them when negotiating and remember they all are eating away at your account profitability.
Your price is too high really means “You haven’t shown your value to me”
Survey after survey of retailers, dealers, distributors, contractors and homeowners shows that price is rarely the key driver in the decision process. In fact, it is usually 4th or 5th.
Make sure that the customer has truly earned and justified the price they need. Make sure you are comparing apples to apples and considering all of the forgotten elements of price. Understand what you are up against by asking smart questions and getting all the facts.
Once price is relinquished make sure you have gained something for the value you provided. Finally, communicate thoroughly, professionally and always be reinforcing your value.
Being competitive is more than just price
What added value can you offer?
- What else can we bring to the party other than price?
- How can we help grow the customer’s sales?
- How can we lower their cost?
- Can we use any of our unique capabilities to keep from cutting the price?
Marketing is all about 4 P’s, only one of which is Price
Make sure you spend as much time understanding pricing as any other one of the P’s.
Pricing deserves respect, attention and creativity. You will be rewarded with greater profitability and be more competitive as a result.
Greg Bonsib is an author of the new Mighty Guides Ebook Data Disruption.
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