No matter what you may have heard, no matter what your customers tell you, price is utterly irrelevant -- if you know how to sell correctly.
The key to making price irrelevant is differentiation. Differentiation is how you make your offering (and yourself) stand out from the crowd. But it's more than just a way to get front and forward.
While customers love to compare the prices of different offerings, every such comparison is completely bogus because no two offerings are EVER truly identical.
For example, suppose you have two order processing systems that have identical feature. One is priced half as much as the other. The customer will pick the one that's cheaper, right? Not necessarily.
Suppose the cheaper system has twice the downtime as the more expensive one. That downtime could mean millions of dollars in lost business -- making the lower price a false economy.
The primary job of sales rep who's selling the higher priced product is to differentiate, and then assign a financial value -- to the customer -- that makes the higher price completely irrelevant.
To do this, you ask yourself the following questions:
- How can my offering uniquely help them improve their revenue? How much more product could they sell? How much are those extra sales worth to them?
- How can my offering uniquely help them reduce costs? How much could they save in labor costs? How much could they save in overhead?
- How can my offering uniquely help them improve quality? How much could they save in reworks, scrap, overtime, corrective action costs, and so forth?
- How can my offering uniquely help them improve delivery performance? How much would they save in canceled orders, expediting costs, airfreight charges, and so forth?
- How my offering uniquely reduce their exposure to risk and liability? How much could they save in penalties, legal fees, and litigation?
READERS: Do you agree? Or are you still flogging away in a price war?
The above is based on a conversation with Robert Nadeau, a consultant who helps companies with pricing issues.