“You must determine your competitive advantage and use it to differentiate your product or you will be seen as selling a commodity.”
Using Your Higher Price To Your Advantage
You must or should sell your product or service on the basis of some competitive advantage.
While there are really 5 ways to do this, we'll focus on high price for the time-being.
One facet of your competitive advantage could actually be your price. It is true that some people and businesses really do buy products and services seemingly on price. And we know that many salespeople (maybe you) face customers who say the only important thing is price. But, as we’ve indicated, our research clearly shows that price is virtually never the primary reason a person buys anything. It is seldom even the secondary reason.
Usually, it’s a third consideration at best.
Many salespeople might say, “If you don’t think people buy on price, why don’t you follow me around on some sales calls? Why, just yesterday I had a prospect say to me that there’s only three things that are important when he buys: 'The first one is price, the second one is price and third one is price.'" We know your prospects will tell you that. And they’ll do that because they are trying to get you to cut your price. But their behavior belies their words.
In fact, many people get very nervous even thinking about buying something that is low priced. Indeed, an analysis would likely show that there are more people who actually buy products or services on the basis of the price being HIGH than there are who will make a purchase on the basis of the price being low. You’ve probably even heard people who contemplate making a purchase say, “The only thing that really worries me about this deal is that the price seems so low.”
If you don’t think people buy on high price, let’s consider another example. Would you go out to the low price bidder for your own, personal brain surgery? Probably not. Because fundamentally, deep down, you really feel that you “get what you pay for” and the thought of going to the low price bidder for your brain surgery messes with your mind.
Most of us have an intrinsic feeling that price has something to do with the quality and the value of the product or the service, that we are buying. In fact, most of us feel that price makes a statement about not only the quality of the product or service, but even to some degree, about the advisability of doing business with a low price seller.
Price Makes A Statement – A Credibility Statement
If we told you we had a brand new Rolls Royce parked out front that we’d let you have for $87,000, the first thing you’d ask us is, “What’s wrong with it?” And the second thing is, “Do you have title to it?” because you probably couldn’t believe that we would offer to sell you a new Rolls Royce for $87,000 unless something was wrong with it or if it was stolen property.
Price does make a statement. A statement not only about the quality of what you are selling, but also about the very advisability of even buying it.
If your price is too low, the prospect thinks there may be something wrong with it. Now, let’s look at the flip side. If we told you we had a new Rolls Royce we’d sell you for $600,000, what would you say? You’d probably say something like, “Really? What makes that car worth $600,000? I want to see that car right now.” TRANSLATION: “Tell me, show me, sell me on why I, or anyone, would pay you $600,000 for that or any car.” Again, price does make a statement. A very credible statement.
Just as people will believe you when you tell them you are cheaper (and they will believe that in every sense of the word – in your price, your quality and your value), they will also believe you when you say you are higher priced (again in every way – price, quality and value).
Salespeople who sell at premium prices know that they can use a high price to make a credibility statement about their product or service being better – i.e. if it costs more, it probably is worth more. And they know that by acknowledging that their price is higher than their competitor’s prices, they trigger a “the heck you say” response in your customers which creates the most receptive, responsive atmosphere in which to sell your product.
Published on February 27, 2014