How To Never Discount Your Prices Again

By Will Swayne | In Positioning | 5 Comments

I just finished reading Pricing With Confidence by Reed and Holden, where the authors identify a dozen tricks buyers may use to get you to cut your prices. How many can you recognise?

They claim your competitor’s quality, service, and delivery are as good as or better than yours.
They say, “We don’t care about quality, service, or delivery. Price is all that’s important.”
They say, “Let’s write it up at a lower price this time. We’ll see if we can’t pay more later when we know how well you perform.”
They assert you have to meet certain requirements, such as, “We can pay only X dollars per unit.”
They say you can use their name as a reference to other, potential customers.
They do their homework and they know about problems your company is having (or bluff that they do).
They use the old “rock-bottom price” ploy: “I don’t have time to meet. Just give me your absolute best price.”
They hit you with terms to their advantage and use false breaking-off points.
They ask for throw-ins. This is called nibbling.
They walk out on the deal occasionally — just to “teach you.”
They say, “I need a reason to change suppliers. For me to do so, you must beat their price.”
They play the power game relative to how the furniture is organized; where to sit; and they try to split up your sales team.

Most of us have probably fallen for some of these ploys at one time or another. But let’s look at why customers are able to get away with tricks like this:

Weak positioning: would you demand a lower price from your heart surgeon? No, because you see a surgeon as a respected expert. The more you’re seen as a non-differentiated commodity, the more you’re open to price gouging and unable to parry effectively.
Under-developed “value selling” skills: it’s possible your skills in the area of value selling, objection-handling and price negotiation are lacking. Preparing and rehearsing a selection of “sound bites” in advance to deal with common price objections is one strategy that can bear fruit.
Lack of DEAL FLOW: weak deal flow is insidious in many industries and many companies. When every potential deal is “make or break”, your position is weakened. But when you know there will be “another bus along any minute”, you can hold your nerve…and your prices. If a potential customer is only prepared to do business on non-economic terms, you’re better off without them.

Our most successful clients are able to grow strongly while making good margins, not by possessing a “slight edge” when it comes to buying clicks or getting SEO traffic, but by developing:

Unique positioning
A powerful value proposition
Strong deal flow

Get these three things right, and you’ll never have to discount again.

5 Comments »

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Thank you for this one.

In any business, profit margin should be protected at all costs.

One of the technique I use is to do an apple to orange comparison.

Robert Kiyosaki used it for his cashflow 101 product.

The game board is selling at $200 and is expensive compared to other games. But when compared to a high end university course or a seminar, it is cheaper.

Thanks again for this one.
Tweeted it.

Comment by Jeff — March 5, 2012 #
Excellent post. There’s a lot to be said for providing a high price you know people won’t go for then providing the ‘mid’ price. All based on how much you have to deliver. It’s the old ‘Good Better Best’ tactic.

As you said, the most important thing is to push the value of the product or service FIRST so that buyers understand that your product or service is an investment. Case studies and testimonials buttress this.

At the last minute, you can also raise the price and go ‘take it or leave it.’

Then there’s the ‘what would it cost to get this product in a different way’ tactic. This works well for experts who are selling an information product.

Comment by Scott Martin — March 21, 2012 #
My day job is focused on B2B pricing.

This post is spot on but I’d actually rank the significance of the three factors in the opposite order – Deal Flow (raw traffic) is absolutely key to gaining and maintaining the confidence of a commissioned sales organization.

A sales guy is far more relaxed when they know they’ve got another presentation at 1pm, then another presentation at 3pm, etc.

It’s a huge multiplier to their confidence – it allows them to take more risk when quoting new business, parry price concession requests by selling higher value solutions (I LOVE this tactic – to heck with saving 5% by beating me up, how about we save you 30% by installing a new machine, eh?), and push through cost increases.

One other thought – to keep the troops steady when the sourcing agents are closing in… A friend of mine once said… “If you’re off by 5%, then someone has a sharp pencil… if you’re off by more than 10% then you’re probably selling a different product or service bundle”. Every line of business has their “cheater box” – learn to recognize it and call it out when your competitor decides to compete with a lesser product…

Comment by Margin Hound (nom de plume) — April 4, 2012 #
Always focus on the bennifits your product/service is going to give them. A heart surgeon can charge astronomical prices because he’s giving you the benefit of a healthy heart…(life.)

If you sell marketing services talk about how much money your client will make if they implement your suggested changes. Say things like, I can increase your monthly earnings by 15%, and it will only cost you $x.xx

If you’re a mechanic, don’t sell your services, sell the fact that your services will keep a customer’s family safe while they speed down the highway at 70 mph.

Comment by Bryant Jaquez — April 8, 2012 #
Thanks Margin Hound for your insight. I like what you have to say on higher price, higher value.

Comment by Will Swayne — May 4, 2012 #