Oscar Wilde was quoted as saying “A cynic is someone who knows the price of everything and the value of nothing”.

You may be forgiven for thinking that most of your prospects, according to Oscar, are therefore cynics! It may appear that the majority of your objections these days revolve around the price issue. Yet many prospects will say they are looking for value. What’s the difference, and how can you deal with it effectively?

Let’s define ‘value’. The first thing to remember is that value comes from what your product does, not what it is. Value is an outcome, and understanding your buyer’s perspective helps you form a solution to maximise the value in their eyes.

Price is different. Price is the actual number that is at the bottom of the invoice. Price is what customers spend; value is what they receive. Price is the buyer’s input; value has longer-term impact.  When the outcome exceeds the effort the buyer has to put in, the solution you provide has high value to them.

Value, then, asks the prospect to weigh up the cost-benefits of dealing with you.  They ask  ‘Is your product a fair exchange for the energy, time and money I have to input to get it?’

When people are questioning the price, there is a perceived lack of equity in the exchange; that is, they feel they are giving more than they are receiving, in some way.

When your prospect is purely focusing on price, they delete everything else, including the cost of ownership, maintenance, usage and other elements of the solution you are putting forward. People who focus on value look beyond the short-term, viewing the results of the aquisition far beyond the bottom-line price.

So how can you get your prospects to look beyond up-front price and concentrate on the value of your product?

Ask questions like these:

‘What would our solution/product/service enable you to do tomorrow that you couldn’t do yesterday?’

‘What problems would you be able to solve with our product that you couldn’t solve without it?’

‘What new opportunities could you follow with us that you couldn’t without us?’

These kind of questions get your prospect to focus on the difference between price and value. The prospect has to think about the long-term benefits of dealing with you rather than just highlighting the price differentials. They look at the purchase as it affects them from A to Z.

So you must understand the impact of the value you offer on your prospect and the fact that the real outcome for them is their investment in and implementation of your solution. In other words, what will have the greatest impact on your customer – the cheapest price or the best value?

Happy selling!

Sean

Sean McPheat
The UK’s #1 Authority On Modern Day Selling
MTD Sales Training

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The Right Way To Drop Your Price

Step 1: Stand Firm & Ask for the Order X 3

Probably the biggest mistake most sales people make when reducing the price is they do so too quickly.

You cannot give away money.

You cannot lower the price too soon. You must stand firm on your original price as long as possible and believe you will get it. When you lower the price too fast, the prospect first begins to lose respect and trust for you because your first price was apparently just a ruse. The prospect begins to wonder just how low can you go.

You must remain firm on your price and ask for the order a minimum of times before you consider doing anything.

To do this, you will need to have something to say, some closing questions to continue to ask for the order at the original price. In other words, you cannot just keep saying, “But this is a good price, Mr. Jones, buy the product…But this is a good price Mr. Jones, buy the product…”

You have to have different closes:

Examples:
“Mr. Jones, you and I both know that this product is worth easily twice that amount. Plus you agreed that you did some pricing before. Now let’s go ahead and put this order in place”

“Jane, the longer we put this off, the more money your people continue to lose. I mean, if you do not start this service today, you will pay for it anyway. Let’s go ahead and get you started on a new program today, ok?”

Put out a hand to shake, extend the order pad with a pen, do something, but continue to close. You have to do this a minimum of three times—with conviction.

Step 2: Build Value X 3
After you have asked for the order it is time to add to the value of the product. You must always increase the value before you lower the price. This is imperative. When you are in this situation, the value of the product in the mind of the prospect is at one level and the value of his or her money is at a higher level.

When you then simply lower the price, you consequently also push down the value. You must first raise the value, then raise again, then raise the value again and then slightly lower the price. When the value of the product and the money match = sale.

How do you raise the value of your product?

You must have several value building statements to add at this time.

Examples:
“You know, Mr. and Mrs. Smyth, this policy will also add to the value of your home.”

“Mrs. Johnston, every day that your administration staff goes without training, they cost you money. Statistics tell us that the average employee spends about 22% of their day wasting time due to their inefficiency with the software. With your average employee earning £3,400 a month, I say that you throw away about £750 a month PER employee! This training program guarantees each person will increase their proficiency level by at least 30%”

You have to have some value building statements that are strong and real. You can also amplify the problem, which will increase the value of the solution as well. Fill in the blanks for at least three value-building statements.

Step 3: Get an Idea for a Valid Reason and Justification

Now you must have a very good reason to justly any reduction in price. You need to come up with an idea that will allow you to slightly lower the offer and you need to explain this idea. You need to sell the concept of the reason for the drop. There has to be some benefit in it for you or your company.

Example:
“You know, James, we do not have any clients in this area and we would really like to get our foot into this territory. It might be worth it to my company to do something to help make that happen.”

Getting referrals is a great idea…
”Ok, I have an idea, Bill. You know a lot of the business owners in this area. If you can give me the names of five of your associates so that I can give them a call to tell them about my product, I’ll essentially pay you for those referrals”

Step 4: Drop the Price for a Mutual Benefit and Close
Now lower the price and do it slowly. You should act as if you are giving away your own money out of your pocket, because you are!

If you are going to drop incrementally and very slow because of the nature of your product, then you need to have as many reasons. You should also be using a “Talking Pad,” to do this.

A talking pad is nothing more than a note pad or paper where you can visually write out the offer and the reduction. This “seeing” is important. Immediately after the reduction, close strong with an assumptive attitude.

“Ok. Bill. For the five names and numbers of business associates, for me it is like advertising. I will pay you £40 per name or £200 for the five names and I will take that right off of the price, right now. So, the whole thing comes to only £3,200, and you are going to love it. Now do you want delivery next week or should I set up a rush order?”

Happy Selling!

Sean

Sean McPheat
Managing Director
MTD Sales Training

Telephone:
0800 849 6732

Have you downloaded my latest report yet? “The Sales Person’s Crisis” has been downloaded by over 10,000 sales pros and entrepreneurs. Don’t miss this unique report that lifts the lid on modern day selling!

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The Correct Way to Offer a Discount: The Proper Price Drop

“How do you effectively reduce your price to help you close the sale?”

Well, reducing your price, offering discounts or “price dropping” is an extremely delicate issue requiring skill, practice and a strategy that when done right can do wonders for your business and career. However, reducing your price incorrectly will result in lost sales, trust, credibility and a truckload of income.

Also, understand that such a practice is not feasible for every industry: you must know your business. Then, you must know the three steps to an effective price drop:

1. Stand firm
2. Build value
3. Find a justifiable reason

First: Stand Firm.

This is where most sales people blow it. You made your presentation or you performed a thorough consultation and you made an offer that you claim is your best recommendation, your best price and value. The customer says, “Boo!” and you say, “Ok how about this price instead!”

Was your first price just a ruse? When you immediately begin to reduce your price or change the offer, you tell the prospect that your original offer was not in their best interest and credibility and trust goes out the window.

You should close and ask for the order at your original price a minimum of three times before you even think about changing anything.

Second, in effectively offering a discount, you have to build value. Most price objections have nothing to do with price or even money. It is about value. In fact, almost all objections, one way or another, ultimately come back to a question of value. That is, in the mind of the prospect, the overall value: the total value of the benefits received from the purchase; do not yet equal the value of the price or fee to obtain that product or service. Consequently, by simply reducing the price, you simultaneously lower the value.

“Mrs. Prospect, this anti-theft system actually increases the value of your property…”

“Mr. Prospect, everyday your warehouse is losing a ton of money in delayed shipments. Our solution will stop that and increase your bottom line!”

First, stand firm on your offer at least three times, then add and build value to the product or service, also at least three times. Now you are ready to offer a discount.

You must have a valid reason to justify reducing the price. If you can just take out a pen magically change the price, then what is the REAL price? Is there a real price? Understand that today’s modern buyer is educated and savvy. If you just change the price with the wave of your hand—today’s consumer doesn’t buy it (pun intended).

You need a reason and it cannot be that you want the sale. There has to be some benefit to you and your company to offer a discount.

“Mrs. Prospect, if you could be a point of reference for me in this area, it will help me make more sales. If you will do that, I think I can get you a better…”

Have a reason to make the offer and show how it helps you and your company. This is also a good time and reason to BUY referrals:

“Mr. Prospect, every person you recommend that I can show our product to, is worth a lot to me and ABC: it’s word of mouth advertising. If you can give me ten referrals, I’ll pay you £400 and I’ll take right off of our initial fee…”

Stand firm on your original price, build value and then justify the discount and you will close more sales.

Happy Selling

Sean

Sean McPheat
MTD Sales Training

Have you downloaded my latest report yet? “The Sales Person’s Crisis” has been downloaded by over 10,000 sales pros and entrepreneurs. Don’t miss this unique report that lifts the lid on modern day selling!

Click on the image below to find out why you’re very existence as a sales person is in doubt…