During the 1970′s and 1980′s, price increases were common and expected. In the past 10 years, however, we’ve all grown used to lower inflation and the overwhelming impact of the credit crunch and the worldwide recession. Today, prices are increasing again and it’s an inevitable part of business today that we can’t let ourselves avoid dealing with price increases. How can we use them strategically to increase our selling potential, rather than run the risk of losing clients? How do we sell price increases to clients that have been buying for a long time?

When discussing a price increase with a client, remember that they probably have had to have the same discussion with their own customers. The key to any conversation about raising the price is to emphasise that such an increase will still ensure product and service quality. You cannot simply increase price to raise your profitability. Very few clients will accept that. Here are some ideas to introduce the idea of price increases:

1) How does the customer view you and the products/services you sell? If you have a good reputation with the client, you can identify how the price increase has been naturally applied to help you maintain quality and service. If your reputation hasn’t been so good, you can emphasise how a price increase will help you deal with the issues that will allow you to improve the service quality.

2. What impact will the price increase have on the customer and your relationship with them? If necessary, show them how your costs have escalated from your suppliers, like transportation expenses because of fuel costs. If you’ve taken steps to absorb price increases in the past, show them how you have resisted increasing prices for as long as you could. If you don’t increase prices now, your service and back-up quality may well have to be scaled down and that’s not waht you and your client wants. If your increase is below inflation, show how you have kept prices as low as possible for a long time.

3. Emphasise why your client has been buying from you in the past. Was the relationship always about price? Did they always buy from you because you were the cheapest, or were there other reasons they have remained loyal to you? If so, ensure they see why the long-term relationship with you is so much more important than price. Have at least two important criteria the client has in choosing you and why your product and service still satisfies those needs.

4. Has your client had price increases from other suppliers? If so, what price hikes have they experienced and what impact have those increases had in their long-term relationship with those suppliers? You need to show your client that you aren’t themonly one who has had to suffer.

5) Is there a possibility the client can absorb the price increases into their business, or even pass them on in some way to their customers? If you act as a partner to your client’s business, you help them to see how effective they can be in their market with their customers.

This article shows that are always some things our clients will want along with an excellent price offering.

One company we know of has introduced something called the ‘loyalty plan’. They raise prices immediately, then for six months agree to keep all loyal clients to the old rates. They let these clients know that they will discount the new price back to the old one during this six months.

The new price is put on the invoice but the client sees the discounted net price on the bottom of the invoice. They see the increase but they aren’t paying it yet. With every invoice they are reminded of what the price will be soon and they can get used to it.

The company stops the discount after six months. The service and back-up has been the same, and the reasons why the client uses the supplier has been reiterated every month. By removing a reduction instead of adding an increase, the client feels they have benefited for six months. And by raising prices immediately, all new customers pay the higher price. So the company earns extra profit on every new sale starting immediately, and also found that some clients even stocked up to buy before the price discount expired.

It’s an option you can try to make sure your existing clients are given rewards for their loyalty.

But what if you have price-sensitive clients who walk away from you if costs go up? Well, if they do, it’s usually got something to do with the perception of value – they don’t feel they’re getting good value for what you’re charging or what you plan to charge.

If you’re more than confident with the value you provide, then perhaps the lost clients are not the greatest loss in the world. Price-sensitive clients normally cause you lots of pain anyway, so ask yourself if they are a really big loss to your company in the long run.

Remember, each year that you’re in business, you offer one more year of experience to your clients, one more year of developing their business, one more year of expertise, one more year of goodwill and relationship-building. That should more than enough justify any increase in pricing that you have to pass on. And if you have a strong business partnership with them, they will accept it is a normal way of doing business with you, now and in the future.

Happy Selling

Sean

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

Have you downloaded my latest report “The Sales Person’s Crisis”? Over 10,000 sales pros have.

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There’s a great saying that I’m sure you know well; “The bitterness of poor quality remains long after the sweetness of low price is forgotten”. Most clients know the association between low price and poor quality. Here are 10 things that the prospect wants more than the lowest price available.

1) Reliability and Dependability. Remember those old, sad stories about certain makes of car that had less than reliable reputations? They were also the cheapest on the market. Why didn’t they sell well? You don’t need me to tell you!

2) Predictability. If they have to wonder what is going to happen next with the level and quality of service, there is something wrong.

3) Breadth and Depth of Quality. This applies throughout your range and through time. If you don’t offer that, they won’t trust you in the future, especially if your product quality is as brittle as your relationship.

4) Reaction to their overall needs. Most clients will beleive their business is unique, and you’d better go along with that, or you’ll be shot out of the water. Agree how the prospect’s needs are different to other clients.

5) An easy relationship. Yes, people do buy from people, and for most, the long-term partnership will mean more than getting the cheapest service.

6) Better and shorter delivery times. Their business will suffer if they can’t service their customers’ needs. If you can get the deliveries there quick, they’ll be willing to pay for it.

7) Great follow up. People will pay for the reliance and confidence that you will be there when they want you.

8 ) Knowledge and Assistance. Again, this will add tremendous value to the relationship, when you can be used as a font of knowledge and skills to your client.

9) Clarity of terms and conditions. If they have to wade through a forest of paperwork to find out what your warranties are, they won’t be staying very long. Clarity and simplicity is worth a lot to clients.

10) The ability to get on with their business, without worrying about what you should be taking care of. They pay you for solutions. If what you offer is cheap, it doesn’t give you the opportunity to back up your product with the service it needs. Plus, you won’t have the money to do so.

These ideas should help you to determine how you can offer something to your client that is worth more value than the money they would be saving by going with someone cheaper.

Happy Selling!

Sean

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

Have you downloaded my latest report “The Sales Person’s Crisis”? Over 10,000 sales pros have.

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The most frequently asked question we get asked on our sales courses is the one related to price. ‘How can we resist the temptation to give away the shop? We’re not a charity, but our customers often think we are’.

It’s a common complaint. Even though there’s no doubt in your mind that your product or service is worth every penny you’re asking, you also know that there are many competitors ready to cut their price and do whatever it takes to make the sale.

How frustrating is it to have to give away your product at a cut-throat price because the prospect has beaten you down to the ground, promising to buy if you would just go that teeny-weeny bit further (or 10%, whichever is the smaller)? If you play the price game, you will ultimately see your profit melt away.

So you need to have a well-thought-through process for dealing with price pressure. How can you ensure that you won’t give in on price and compromise margins and profitability? What can you do to prevent your margin being eroded to nothing?

Here are three ways to deal with the price pressure clients can force on you:

1. Make sure you know the value of your products and services and how it links to the customer’s business situation. This is the key to creating value and is at the heart of selling with integrity and credibility. A salesperson must understand the departments that are most affected by the solution, and the financial impact of his solution on various sections of the buyer’s company.

Understanding the customer’s critical issues, dissatisfactions, and frustrations, plus recognising the business opportunities that arise from them, takes research, time, commitment, and dedicated work.

2. Make sure you can help the customer calculate the cost of not going with your solution. Imagine being the doctor and your customer the patient. Identifying the cause of the pain is a pre-requisite of any remedy the doctor might prescribe. Equally, before you can offer a remedy, you must be able to firmly establish the pain of not doing business with you.

Increasing the pain and suggesting a remedy for it is the true sign of a consultant, and will take the client’s mind away from commoditising your product by focusing on the price only

3. Make sure the customer realises the benefits of your solution over that of your competitors. Be specific, and highlight areas that the client will identify with immediately. Get the customer to realise how the financial impact of your solution is worth more than taking the risk of a cheaper solution.

These ideas concentrate the client on making solid business decisions and may help you to convince them that price is only one facet of the decision-making process. It also raises the profile and image of your products and services, keeping them out of the mire of pile-‘em-high, sell-‘em-cheap offers that create poor reputations and damage brand image.

Happy selling

Sean

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

Have you downloaded my latest report “The Sales Person’s Crisis”? Over 10,000 sales pros have.

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

On our sales courses, we often get salespeople questioning how they can draw their customers’ concentration away from pure price.

These are tough times, but it is still possible to put the emphasis on things other than price. Try these:

Put your Products and Services in the Limelight: Before you present any solutions, get the customer to agree on all the specific negative financial impacts of the problem they are facing. Ask how the problem that your solution solves has an impact on their profits and income. Ensure you do this while you are questioning effectively, and make sure they agree with the analysis you have worked out.

Make Yourself Unique: You must have something unique (or at least different from your biggest competitor) that makes the customer think your solution is the answer to their problems. And you must be specific enough to make the customer ‘see’ your solution is the answer. If you don’t, you run the risk of the price still being the most important differentiator to the customer.

Be Specific With The Benefits: The benefits must be worth more to the customer than the price. The best way to do this is to get the customer to quantify the specific financial impact of your differentiators on the finances of the problem. You might quantify how much the customer will save with you rather than your competitor’s product, or the value of the time they will save if they use your services rather than anyone else’s.

Following these ideas makes the customer think of the financial impact of NOT going with you, rather than the price of doing so. If you can get the customer thinking this way, not only will the price not be top of their agenda, but the value of what you have will be that much greater to them.

Happy Selling!

Sean

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

Have you downloaded my latest report “The Sales Person’s Crisis”? Over 10,000 sales pros have.

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

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

Have you downloaded my latest report “The Sales Person’s Crisis”? Over 10,000 sales pros have.

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

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…