by John Carroll

I recently visited a local merchant to buy something. In the meeting, I learned that the product I sought would need to be custom-made. Since I had expected that, it was no surprise.

What was surprising, however, was the presentation made by the merchant. It went something like this:

"I’d like to see about getting some of these made," I said.

"Here’s a book that shows some of the options you have, but before we get into it, you should know that the price for 500 is this," he said, pointing at a price of just over $600. "We’ve had some people choke on that."

"I’m fine with that," I replied. "If this does what it’s intended to do, it can help us get business worth $100,000 or more."

Knowing this merchant to be very service-oriented from previous experience, I believe he felt he was doing us both a favor by warning me about the pricing. I came away with the distinct feeling that he considered the price too high. Had I not been determined to get this product, he might have convinced me, too.

What’s the lesson here? It’s simply this: in selling, you want to help your customer base his or her buying decision on value, not on price. Does that mean it’s wrong to offer the lowest price occasionally? That’s not it at all. It does mean that it will be much tougher to create long-term customer loyalty when the purchase decision is based on low price alone.

From a competitive standpoint, price is the toughest position to defend. That’s because someone can simply lower prices to compete with or beat your price. It takes no great marketing mind, no innovative product design or application, no in-depth marketing research to know that you’re likely to get more looks by offering the lowest price for anything. Beware: these are short-term looks. And virtually anyone in the market can offer a lower price in the short-term.

An exception to this is a company such as Wal-Mart, where low price is the dominant market message. At Wal-Mart, all systems are designed to support the chain’s ability to buy from its suppliers and sell to its customers at lower prices than the competition. Even Wal-Mart offers more than low pricing by attracting shoppers who like its hassle-free return policy.

Save price for last

In the sales conversation, price is the last thing you want to be discussing. In sales, you build value in the mind of your prospect before you mention what he or she will have to do to enjoy the product or service. You may consider this very basic, but there are sales people who will dive right into a price discussion or argument before they ever ask the questions to understand fully what the prospect wants and needs, that is, what represents value to the prospect.

When it comes to pricing, how high is too high? Ask a man gasping for air how much he’d pay for a single breath from an oxygen tank. The value is already there.

How do you handle price objections from your prospect? Consider this: when the prospect says it costs too much, he or she is doing one of two things. The first is simply trying the five magic words he/she learned at the latest buyer’s seminar: "Your price is too high." It often gets the intended result, a drop in pricing from many sales people.

The second thing this prospect could be doing is asking, "How can I justify paying that price?" So what’s your response to "Your price is too high?" If your first move is to drop your price, and the prospect was really asking how to justify the initial price, your answer becomes, "You really can’t justify paying that price, and I can’t justify charging you that much, so let’s lower it and we’ll start this discussion again." Now you’ve given yourself a good push into a downward spiral where the price will fall as far as you will allow it. With each drop, you show the prospect that his/her time invested in the discussion is getting a good, if not great, return.

When your low price offering is part of a strategy to create a long-term loyal customer, you need to send a clear message that this low price also includes service, satisfaction after the sale, warranty, guarantee and whatever else you offer

The VP Relationship: Build the value (V) so that price (p) appears small by comparison.

So how do you get away from the price when you’re selling? Simply focus on the value your prospect should expect from buying what you sell. That could be a high return on investment, greater enjoyment, higher productivity, convenience or any of a number of other measures.

Here are four steps, taken from the work of Alan Weiss, in his book, Million Dollar Consulting (McGraw-Hill, 1998) to focus on value in selling to your prospect:

1. Focus on objectives : Establish value by determining exactly what someone wants to get from your product or service. Ask, "If ever you were to buy this product or service, why would you buy it?" The answer to that question should lead you to the prospect’s specific want or need for your product.
2. Confirm desired outcomes : Restate what you’ve heard by saying, "So if this copier does what you want it to do, you’ll have greater productivity in your office, right? It’s critical that you get agreement for full understanding of desired results.
3. Check for measures : Ask, "How will you know you’ve reached higher productivity?" This takes the guessing out of perceived return on the prospect’s investment.
4. Determine the value ; Ask, "What would be the value to you of higher productivity?" Answers could include increased revenues, more satisfied customers, cost savings, faster turnaround time and more. Get as many answers as you can, because this is where the true value is really established.

From this point through the rest of the sales discussion, simply refer back to the prospect’s objectives, measures and value. That keeps the focus right where it belongs, on the value the prospect expects to receive rather than the price he/she must pay to receive it.

John Carroll is President/CEO of Unlimited Performance, a Mt. Pleasant, SC, firm focused on organizational and individual performance improvement. Brian Tracy International, a worldwide network of consultants, has recognized him for sales excellence. Contact him at 1-800-672-4277 toll-free, email at jcarroll@uperform.com, fax at (843) 881-6746.

© 1999 John Carroll All rights reserved.