Sharpen Your Value Creation or Sharpen Your Pencil

You’ve been asked to sharpen your pencil. You’ve been told that your dream client wants to give you their business, but one of your competitors has come in at a lower price. If you want to win, you have to do better. You have to reduce your price.

You have to choices. You can sharpen your pencil, or you can sharpen your value creation.

A Few Notes First

First, you have to keep in mind that it’s your dream client’s responsibility to get the best deal they can they can. They have to check. They have to ask you for a lower price. It would be irresponsible of them not to.

Second, most of the time your dream client is willing to invest more to get the result they really need, but they need your help in justifying the greater investment. The more you can quantify and explain how a greater investment returns greater results, the more likely you are to keep your pricing in tact. You help them sell it.

Keep these points in mind before you cave in on price.

Sharpen Your Value Creation

When you are forced to defend your price, you need to push back by pointing to the value you are creating. You sharpen your argument around value before you sharpen your pencil.

Instead of allowing your dream client to underinvest in the result they need, you remind them that your pricing model was built on getting them the result they need, pointing out the risks of underinvesting.

You remind your dream client that the reason they haven’t been able to achieve the results that they sought in the past is because there wasn’t enough value being created. Something has to change.

You point your dream client back to the higher cost they will pay by paying a lower price, that price and costs are different.

The Last Word

As I write this I am reminded of how many clients I have seen over the years switch providers expecting different results only to be continually disappointed. They believed the big lie that they could produce better results and pay a lower price. Until they didn’t believe anymore.

You can’t blame your dream client for choosing a lower price if you didn’t do everything in your power to sharpen your message around the value you create. If you didn’t help them to defend your price by defending it yourself, you’re going to have to sharpen your pencil.


When your client asks you about a lower price, does it mean that they really need to pay a lower price?

Is the value that you create in any way related to the value your competitor’s create? What makes you worth paying more to obtain?

Is your messaging around the value that you create so differentiated and compelling that it allows you to easily defend your pricing, the necessary investment to producing those results?

How do you help your dream client to defend your pricing within his or her own organization? How do you help them answer the question as to whether or not they asked you to agree to a lower price?

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  • Carol Lynn Rivera

    I love this message. When we want a job, it’s tough to take a hard line on pricing and I’m sure for a lot of people, the immediate reaction is to compromise. But this is a much better approach all around. Not only does it give the value and get the return, but it starts a business relationship on a stronger foundation because you’re willing to stand by your work and your pricing. I think that shows confidence. Of course, you have to be able to deliver :) But presumably if you’re in this position you already have the skills to do the work. The next thing many of us need is the confidence to sell it!

    • S. Anthony Iannarino

      Confidence! It’s crucial. If you create value, you have earned the right to some part of it.

  • The Roman

    As a salesperson it’s easy to understand the concept between price and cost but as a buyer all you really see is what you pay upfront; buyer’s knowledge is learned not taught. The negative perception of a salesman/saleswoman makes a lot of what you say seem, well, scandalous. By you saying “I understand your concern with the price however the cost of repairing what could happen with an undervalued solution would potentially be of greater consequence” sounds good to you but to them sounds like a sales pitch they want to avoid. It’s an odd place to be in a down economy where cost leaders (better said as price leaders) run the market down with undervalued products at a significantly lower price.

    My suggestion is to throw out the objection of price before they can stating the ROI for any solution you may offer. For the most part if your client brings up price as an issue you already lost.

    • S. Anthony Iannarino

      That’s not a bad idea, Roman. In fact, I wrote a post sometimes that you have to use price to disqualify prospects sometimes. Time is too short to waste convincing people to see value in something they don’t value.