Once You Choose to Compete on Price

The problem with choosing to compete by having the lowest price is that it eliminates the ability to compete on anything else.

You Can’t Be Best and Cheapest

You can’t innovate and create new products without capturing enough of the value you create to make the necessary investments. You can’t create experiences, or compete on exceptional service and legendary support, without being able to put money into achieving those outcomes. And you can’t create the kind of solutions that come from a relationship with a strategic partner, because that requires people and money.

You can’t be better and cheaper. You have to pick a lane. By choosing price, you have eliminated other choices.

Pick a Lane

With enough money, you can be better and faster. Without the investment, you can only be cheaper. If you choose to be better, you have to charge more so that you have the ability to create greater value.

Most sales organizations don’t spend enough time explaining to their sales force the competitive strategy they have chosen and why they have chosen it. This leaves many salespeople with the belief that they should have the best product, service, or solution while also having the lowest price. This mythical and unobtainable competitive strategy exists in only two places on earth: in the minds of some clients and some salespeople.

The truth is, you have to make a choice of strategies, and choosing one eliminates the other.

The Truth About Low Price

The truth about low price is that it doesn’t make selling easier. It makes selling more difficult. Once you have eliminated the ability to be better, you’ve lost the ability to compete by solving the problems and eliminating the risks that come with choosing the lowest price. When you can’t be better, then there is only one way to compete, and that is by being even cheaper still.

The lowest price is often called “value,” but the only real value being created is the low price of acquisition, for the sales organization and the client. You don’t value what is cheap. You value what is exceptional, what is precious, what is worthy of being valued. The lowest price produces none of these, and so you aren’t valued either.

Filed under: Pricing

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