How to Defend Your Higher Prices

During tough economic times, customers go bargain shopping. You have two choices. Compete on price and watch your margins go down the toilet, or defend your prices by showing the customer that buying on the cheap is a false economy. Here's how.

A reader writes:

I have a problem in closing sales.
I have been doing everything by the book. I make cold calls, see the customer, propose my services, tell them the benefits and help them understand that they are getting the best when using our services.
But my customers take a long time to sign up as there is so much of competition in the market when it comes to pricing as customers here are looking for always the cheapest. It is like they want to buy a Mercedes but they want to pay the price of buying a bicycle, if you know what I mean.
What can I do to increase my closing of sales when customers are interested in just pricing and how can I get them to make a speedy decision most of the time? The decision makers are the top management.

Your problem is that, while you're doing "everything by the book," your book is out of date. You need to add three steps to your sales process:

• STEP #1: Get the customer to agree on the specific negative financial impact of the problem. Work with the customer to define ALL the ways that the problem that your solution addresses impacts their revenue and profit. Include direct costs, lost opportunity costs, personnel costs, etc., etc. Do this early in the sales cycle and make sure that the the decision maker buys into the cost analysis.
• STEP #2: Convince the customer that your solution has attributes that no other solution provides. It's not enough to be vaguely "higher quality." You need to be able to express specific quantitative elements of your entire solution that are unique from the competition. Anything that is unique about your solution (even the fact that YOU are the sale rep) is a potential differentiator.
• STEP #3: Get the customer to agree on the specific financial impact of your differentiators. For example, if your products can be at the customer site within one hour, and the low-cost competitors can only get the product there within 24 hours, what how much is it costing the customer to do without the product for 23 hours?