Strategic Investments or Tactical Price Reductions

Different people at different levels within a company can have different ideas about the money they spend and your pricing. What follows here is a generalization, but it’s useful for making an important point. The people at higher levels within a company are generally interested in investing in the outcomes they need, while people in lower levels tend to think in terms of cost savings. 

When you reach out to a higher level stakeholder and begin the conversation by telling them how much they can save them, you may find a disinterested party on the other side. Often, the money you might save them isn’t worth the time or trouble to change. You are also an unknown, so that brings risk into the equation. Saving a few dollars isn’t likely to help them reach their goals, and taking money out of their solution doesn’t normally result in better outcomes. 

The people you are selling to are looking for the ideas that will help them propel their business forward, so the things they are interested in tend to be things that produce transformational results, provide a competitive advantage, and are strategic plays. 

At less senior levels, people tend to care about cost savings, often confusing this outcome with a lower price—even when a lower price will increase their overall costs. In part, this is due the the level of responsibility. If they are not responsible for strategy, the investments you might recommend may be well beyond anything they could agree to, even if they loved your ideas. This is why the conversations you have around price tend to be difficult here; they’re not investments, their costs. 

It matters a great deal that you engage the stakeholders who will find your ideas and solutions to be a compelling investment and who will be less concerned about trying to reduce the investment they are making, preferring instead to generate the better outcomes that tend to follow a greater investment. 

Filed under: Sales 3.0

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