The Difference Between Price And Value

Written by Sean McPheat | Linkedin thumb

28 June, 2010

Price and value scalesOscar 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

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