If You Are Not Going to Sell Price

The job of the salesperson is to create value for their client AND to capture some of the value that they create for their company. There are some iron laws about not selling price.

You must justify your higher price

You cannot command a higher price without demonstrating why you deserve to be paid more for what you do. You might be the most delightful person on the planet, but unless you can convert that into a financial metric that either produces greater profit by increasing your dream client’s revenue or by reducing their costs, your wit, your charm, and your savoir-faire is not going to cut it.

You are going to have to prove that you are going to create a greater return for the greater investment. This is the difference between cost and price. Your competitors sell price; you have to sell cost.

Your role as a salesperson is to be able to justify your price. You are going to have to prove it.

In order for you to capture some of the value you create, there has to be enough created to share.

If you cannot create value for your dream client, there is nothing to share with you. In order to share the value you create with you, you have to create enough value to deserve your share.

If the value you can create is a tiny bit better than your competitors, you can command a tiny bit more in price. There isn’t going to be a whole Hell of a lot to share with you. If, on the other hand, you create a massive amount of value, then there is going to be a lot more to share with you.

There are a lot of salespeople and sales organizations that are trying to compete on price, when it isn’t their company’s strategy. Because they are focused on trying to convert clients who are focused on and already receiving a low price, these salespeople try to command a slightly higher price than their competitors for a slight improvement. This is a race to the bottom. There is rarely enough value created to create enough to really share.

Too many salespeople sell price even when it is their company’s strategy to create greater value and command a higher price. This is not selling! Being able to create value and capture some for your company is the only path to profitable business for you–and for your company.

Conclusion

No one wants to sell price. Selling a greater return on the money invested is more difficult. It requires that you first create enough value that some be available to you as a higher price, and then to justify that price and prove your claims.

Questions

  1. Is it your company’s strategy to sell by having the lowest price? Is that the value that your company sells?

  2. How do you justify the higher price that you charge? Is it by proving a lower cost because you increase your dream client’s revenues in excess of your price? Is it lower cost because you reduce their overall costs by more than your lower priced rivals?

  3. How do you prove your claims to creating enough value to justify your higher price?

  4. Do you create enough value for there to be enough to share it with you? Do create enough value that there is a willingness to share it with you?


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Comments

comments

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  • http://joefisher1.wordpress.com Joe Fisher

    You’re right Anthony. Demonstrating value by differentiating your product or service’s offering is what makes a good salesman great. I am in Construction Sales and with the market down, many customers are very price sensitive and get a lot of pressure from management to go with the lowest initial price. If you can’t demonstrate clearly how your product is the lowest COST, your dream client will default to the lowest initial cost. We use a spreadsheet that breaks out all of the costs of using a system and compare them side by side. At the end, they see that when you add up ALL of the other indirect costs, the product with the higher initial price is usually the lowest overall COST.

    Thanks,
    Joe Fisher

    • http://www.santhonyiannarino.com S. Anthony Iannarino

      That’s a great weapon to have in your arsenal, Joe. Too many sales organizations allow themselves to get to an apple and oranges comparison and lose. All things being equal, you go to price. All things not being equal is something else altogether.

      Anthony

  • http://www.SalesforceAssessments.com Brian Jeffrey

    When a salesperson doesn’t believe that the value of what they are selling outweighs the price, neither will the prospect. This causes salespeople to go to their sales managers, hat in hand, begging for a lower price.

    My advice to these salespeople is either believe in the value of what you sell or find something of value you can believe in and sell it.

    • http://www.santhonyiannarino.com S. Anthony Iannarino

      The great thing about a blog like this is having readers who can point out the most important and overlooked point of your whole post. Belief is everything! Thanks, Brian! I may have to go back and add your point!

      Anthony

  • http://www.gabrielgr.com Laura Kucharczyk

    I associate buying on price with shopping at Wal-Mart vs. Target. You might spend a little more at Target, but the shopping experience is so much nicer!

  • Michael

    A strong inner frame around your value, and your service values comes through in volumes when having this conversation with a prospect, as much or moreso than all the technique in the world.

    It’s critical for your less experienced sales pro to understand that not every prospect understands or can be taught the price/value concept, and when to walk away or fire a customer that does not respect your value prop. They need to make choices around where they spend their time, and as Sun Tzu would say from the Art of War, retreat is still a form of attack.

    Regardless of your value prop, you will never capture the total market at the price you need to sustain it. Not everyone will buy an iPod.