Has Price Quoting Made You A One-Trick Pony?
We feel that buyers have tremendous pricing leverage over us right now because of the recession. In most cases, I believe we give them this power because we don’t view our pricing, and all of its ramifications, from the purchaser’s perspective.
Budget And Price
After many years of selling, I learned that “price” equates to what a product/service costs and “customer budget” simply means what the prospect or customer is willing to pay for it. This is nothing more than basic price negotiation. If our conversations with customers don’t get past this, are we really selling? No.
There Has To Be A Better Way
This kind of one-dimensional price-centric dialogue puts us in a weak negotiating position. There is another variable that is ultimately more important to the customer than price – whether they know it or not. It’s called ROI (Return on Investment).
When we fail to introduce ROI into the selling process, we’ve inadvertently made the purchase price the number one issue. This is not the way to sell in 2009, especially if you’re selling a product that includes a service.
ROI 101
ROI allows the customer to have a 360° view of the costs versus benefits of purchasing your products and services. Your initial purchase price is only one of many variables.
Every product/service will have different variables, but the high level ROI formula is:
ROI% = (Benefits of your product/service – Total Cost of Ownership) ÷ Total Cost of Ownership
Your company should have a template or software wizard tool that will assist you in gathering and presenting a legitimate ROI to your customers. If you are selling a product/service combination, this is an especially important tool to have.
Sales Tips Wrap Up
By doing even a simple ROI assessment for your customer, it will require that you get involved in the operational and financial aspects of their business. This is a good thing.
This will definitely take a greater selling effort, but it is a game changer because you have moved well beyond just talking about price with your customer. You’ll better understand your customer’s business while simultaneously justifying your pricing.
©2010 Scott R. Sheaffer
Related posts:
- Does any customer at any time ever pay the lowest price for anything?
- Impotent Price Quoting: Sales Tips on Fixing the Dysfunction
- Customer Price Sensitivity
Tags: collateral, negotiation, pricing, recession
We'd like to hear your feedback on this post - feel free to comment below!
September 11th, 2009 at 6:58 am
Scott.
It occurred to me that you can’t run very well to the aid of a customer with your pants around your ankles.
It is still tied to the ratio of 2 out of 3. Price, service and quality. A business can only provide two out of the three ans stay in business, your customers if they are in business understand and can relate to that equation.
Empower them, let them pick any two of the three and provide that for them.
ROI is necessary for US to feel good about our asking price. When we know and are confident of the ROI we present with confidence.
We will also lose the race to the well prepared competitor as they can out run those with “pants around the ankle syndrome”
Welcome to the blue collar school of marketing, I don’t suspect this will be published.
September 11th, 2009 at 6:15 pm
Of course your comments will be published Uwe! I’m referring to your last sentence of your comment. You are one of my mentors and one of the most gifted sales professionals I know. Thanks for being a subscriber and commenting on occasion.
Scott