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.
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