What causes price erosion?

TommyMac5

Do you feel that price erosion is caused by a sales team that is unable to continually quantify thier added value?, an un-sophisticated buyer looking for the cheapest price?, local and global competition?, all of these?, non of these?.

Agent Smith

I feel that "price erosion" is based on "perceived value".

Houston

Price erosion can result from local and global competition leveling the playing field by including premium features as standard.

susana

I saw this happen when I sold medical equipment. You would bring out something new and within a year everybody would have the same thing. You'd get a premium price until all the copies came out. It then became a 'me too' product and the price fell

Susan

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AZBroker

I don't think a single sales team or un-sophisticated buyer causes price erosion. I agree with Houston and Susan that competitors actions/reactions can be a cause of price erosion.

AZBroker

What is your opinion on this TommyMac5?

TommyMac5

I think that the sales people really need to continually support the value added. Some products and services just don't change, so the ongoing precieved value deminishes over time via added competition, newer products, ect. The sales people need to shore that lack of value up with service, suppot and proper (not eroded) pricing.

It seems to me that the basic syringe hasn't changed much in many years, but I'll bet there's a syringe salesman (or woman) making a hellova business selling them. I *also* think there are dozens of syringe salespeople out there complaining that they can't sell this "old thing" because of it's commodiation.

A good sales person makes his customer excited about his product every time he leaves, some how, some way.

That's my opinion.

TM

TommyMac5

AZBroker,

I have an add-on question for you in your trade; Do you as a realtor feel that your product (real estate) has begun the process of commoditization due to the free availablity of property sales information with websites like Zillow, and the ability for FSBO's to go pay $500 for a Realtor.com listing?

AZBroker

Great question.

I don't see real estate (real property) becoming a commodity anytime soon. Real estate "services"... that's a different story. Now that consumers have greater access to "listing data" a shift to value-added services will need to take place.

TommyMac5

Well, if it's all the same to you - I have no plans on ever selling by owner, I believe in paying for professionalism.