"Is it possible that what we’re selling is just priced too high?" I hear that question a
lot when troubleshooting sales issues for clients during my seminars and coaching sessions.
Plus it’s worth noting that it’s a question that tends to turn up again and again like a
bad penny particularly in challenging economic times. My answer is always the same: price
isn’t the problem.
I’ll repeat that again so the folks in your accounting department can hear me. Price
isn’t the problem.
If you are already established in your market and you have set your prices competitively,
then price-cutting is the last thing you should be thinking about as a solution to boosting
your sales. Even in today’s tumultuous marketplace. To be clear, you do need to make sure
that you price yourself strategically because your price determines a lot about who will
buy what you’re selling—not just in the short term, but in the years to come. Consider who
you want to attract as a customer – a Tiffany’s™ minded consumer or a Walmart™ minded consumer?
I am not making a value judgment here, just noting that for each consumer there is a corresponding
Let’s start by considering the risks of price cutting and then we’ll look at solutions.
Price can determine who you are and who your customers will be
The trouble with playing the low-end pricing game is that it comes with a cost. Costs influence
how customers perceive your products or services and can even reshape who buys them and
why they choose you over a competitor.
Sure, some cite high-volume retailers like Walmart™ as proof that low prices and sales success
can go hand-in-hand. But here’s something worth considering. How many successful low-price/high-volume
retailers or airlines can you name? Now name as many successful higher-priced, value-driven
retailers you can think of (e.g., Banana Republic or American Airlines). I’ll bet that your
first list is shorter than the second one.
The high-volume business model is one that most simply cannot emulate. Even fewer can sustain
it. One of my mentors, Dan Kennedy, says it best: "being the second-lowest price has
no advantages." If you are going to be the cheapest, be the cheapest, but that’s a very
hard game to play.
Seasoned sales professionals will attest that a low-pricing strategy can also have an adverse
influence on who you do business with. Instead of attracting customers who appreciate dealing
with a sales staff and organization focused on value and excellence, you risk attracting
buyers with fewer expectations other than your ability to offer the lowest price. Not only
is that expectation difficult to sustain over the long term, it also makes it much harder
to engender an emotional connection with them. And without that magic ingredient, those customers
are less likely to stick with you. And why should they? They chose you largely on price in
the first place.
Low pricing can very quickly become a slippery slope—once you start down that path, it becomes
increasingly difficult to recover from it. Instead, consider the solution that I share with
my clients. Start by re-examining what it is that your customers are buying from you, what
needs they have that compel them to make the decision to buy and why they choose to buy from
you rather than from someone else. What value to you bring? And if necessary, defend yourself
against a price-lowering competitor.
Focus on value and benefits
Top-ranked sales performers don’t sell their products or services based on price. They focus
on the value of what they are selling and how it can best meet
the needs of the customer. They do that by finding compelling answers to the number-one
question that every buyer asks themselves when considering a purchase, no matter how large
or how small: "what’s in it for me?" Your customers want to know what they can
expect to gain by choosing your product or service at the price you’re offering. Recognizing
this, focus your energies into ensuring that your product- or service-offer meets (and
even exceeds) those expectations.
That’s not to say that the value and benefits that a customer perceives is something that’s
carved in stone. Far from it. Needs change with the times and the value that customers associate
with your product or service today could very well be different from what it was just two
years ago. That’s one of the key reasons why the most successful sales professionals invest
a lot of their time talking and networking with their customers—they are always learning
more about what their customers want today and in the coming years. The kind of insight you
gain from that kind of legwork can prove to be invaluable, especially in a changing marketplace.
Defend yourself against a price-lowering competitor
Just because one of your competitors decides to start competing on price alone does not mean
that you have to make the same mistake. If this is what you’re facing in your marketplace,
push back by focusing on your strongest suit—the value and benefits you offer to your customers.
Tony Cram of the United Kingdom’s prestigious Ashridge
Business School (and noted author of "Smarter Pricing") recommends conducting a "benefit
audit." Take stock of the following:
- Look at your products or services and ask yourself if there are new innovations you can
offer. Also, consider how you might improve the range, choice and selection you offer to
- Reconsider the needs of your customers. Are they changing? If so why…and find out how
you can keep meeting those needs.
- Reinforce peace-of-mind in the mind of the buyer about choosing you over a competitor.
Offer a money-back guarantee, or extend the warrantee on your product.
- Position yourself as a leader or expert in your field. Be more than a provider to your
customers…be a resource.
- Personalize your service and make sure that what you offer is always relevant to your
By maintaining pricing a premium level, you continue to work with the best customers
out there—the ones who are motivated by great service, who recognize the value behind what
you do, and with whom you can connect with emotionally. Not only are these kinds of clients
easier to manage, they are vital for you to be successful at your job of selling more to
more people in less time.
Staying in-tune with the needs of your market does take work. It still requires legwork
and thoughtfulness on your part to remain focused on fine-tuning the value and benefits of
your product or service. However, it pales in comparison to what you’d be up against trying
to find ways to constantly keep up with falling prices.