I was talking with a friend about pricing. We were both lamenting the fact that too many people underinvest in the results they need. The underinvestment always costs them more than the difference between the price they paid and the price they should have paid.
In the world of sales, paying more for the salesperson you need often results in millions in additional revenue. But some sales organizations try to save money, hunting for a bargain when it comes to hiring the talent they need. In the most egregious cases, some sales organizations believe commission-only is a cost savings because they don’t pay when the salesperson doesn’t produce, not recognizing that not paying the salesperson does nothing to increase their revenue or to help them acquire new clients.
A lot of people believe it is responsible to pay a lower price. They believe that they are proving that they are responsible, that they are shrewd buyers, that they are value hunters, or that they are excellent negotiators. But none of these are proven by looking at price alone.
In the complex business-to-business sale, price tells you very little. A lower price may actually cost you more than you would have paid had you gone with a higher priced offering. Your results may not be nearly as good. You may suffer the cost of lost opportunities. The challenges you have when you don’t get what you want almost exceed any savings you might have gained.
You never find better, faster, and cheaper all in the same offering. At best, you may find two of these.
In my friend’s world, an increase of a little over 10% gives his clients results that they only dreamed of, and it returns a savings of ten times the additional spend. If you only consider the price, he is more expensive than his competitors. But if you look at the cost, the deal he presents is clearly the best value. To see that, you have to look past the price.
You don’t trip over dollars to pick up dimes.
- What is the difference between price and cost?
- Is it worth paying more for greater value?
- How do you teach your dream clients to shift their focus to cost?