Higher Prices Rule!!!

Coda1108

I think Snowman and Mark are both right. The point in fact is that greater value goes hand-in-hand with higher price. But looking at it from a buyer's perception point of view, when a buyer sees a higher price, they sometimes relate it to higher quality/value without really knowing for sure (in the case where experiencing the product or service is the only way to tell). Of course, this can't last forever, as lower quality will always become known. For example, if I were to produce a new product called a "J-Pod" to compete with an iPod, and charge hundreds of dollars more even though it was an inferior product... it wouldn't last long, as the lower quality would become known. Even worse, with a bad reputation, even if I fixed the "J-Pod" to be BETTER than the iPod six months down the road, it still wouldn't make it, because it already has the reputation of lower quality.

Snowman

I agree with coda and mark, the comment of higher prices rule comes from the fact that a lot of sales people are nervous about high priced goods or services and consequently try to leave the price to the very end, not me.

If I had $10 for every time I’ve done a 20 page proposal only to get the prospect to go straight to the back page and find the price, act shocked, give me a hard time, and then I spend the next 10 minutes defending and explaining my price…I’d be even wealthier than I am now…

I bring price up right away, usually on page 2 or 3, the prospect will never find it there… (only kidding), and if my Jpod is $100 more than the Ipod then all I’ve got to do is get the prospect to see the extra $100 value and I’ve got the rest of my proposal to show them where the extra value is.

For whatever reason, higher prices still rule!!!

__________________
www.optimumautomotive.com

rlabston

These are all good points to recommend higher prices, Snowman. Now for the flip side.

When the economy has gone south and your product is a necessary commodity, higher prices will restrict your sales when your market could be a great deal broader with more popular prices. I have an example from an earlier career experience to relate.

I was trying to sell hurricane shutters to folks on the Florida coast at teh beginning of hurricane season. Now this should be a no-brainer, but . . .
I was working for a great company that sold the cadillac of all hurricane shutters. They told me how their screws were engineered to be 3 times stronger than the competition's screws. The metal that was used was a higher guage than the competition's. This might appear to suggest greater security in the hurricane. However, it was pointed out to me that the competition's shutters remained on homes that were destroyed by a previous hurricane. They found walls blown away with the shutters still attached to them. A shutter that is strong enough to remain attached to the wall when the wall is blown away is adequate and adding more strength to the screws won't keep the wall from being blown away. I have to believe in what I am selling and when I discovered that these shutters were over-engineered, I was unable to continue selling them. The competition's cheaper shutters provided protection as good as was possible for the shutters to provide and at a lower price than I could offer.

Snowman

rlabston

Thanks for that perspective; I understand what you’re saying about the economy….. My spin on that is, after being in business for many years I’ve realized there are a lot of companies doing well and even more struggling no matter what the economy is like.

At the risk of sounding cliché, I decide not to participate in down turns and I tend not to analyze the reasons why things are difficult deciding instead to analyze how we can grow our business.

I usually find that in tough times a lot of people adopt a conservative approach and cut back on marketing and headcount to get the job done. This offers me a good opportunity to actually go out and get more business by taking a more positive approach to sales and marketing than my competitors.

I totally agree with you when it comes to those shutters, no matter how strong the screws where if the home couldn’t hold up then it’s a classic case of over engineering I suppose. You have to believe in your product to keep your integrity intact and part of that is in believing that your product offers a value based solution, which in the case you mentioned it didn’t.

Happy Selling

Snowman

rlabston

I agree that it is possible for some kinds of companies ot thrive in slow economies. In fact, it is even possible for some salesmen to thrive when the rest of the company is suffering along with the economy.


In the first case, some companies thriving in slow economies, I believe it depends on the nature of the product or the service. You know the old saying, you can't get blood out of a turnip? Well, when the priceof gasoline, fuel oil and electricity take 20% out of a family's budget when the family was already struggling to pay the bills, they will probably not feel much like shelling out $1,200 for a new set of encyclopediae or for a new vacuum cleaner. On the other hand, if that family has a new baby in the house, it will always find the money for pampers. By the same token, if you are selling advertising, the reason for slow sales in a slow economy is psychological rather than real. Using the example you pointed out, advertising, the point can be forcefully made that that is exactly when the company SHOULD be advertising.

In the second case, Snowman, when a salesperson defies the odds and continues to excel when his peers are suffering along with the economy, it is because he or she realizes that when there is a 20% unemployment rate, that means that 80% of the workers still have jobs.

So, I agree with your point that it is possible to sell through that slow economy with some caveats. And you make another good point here which I alluded to earlier. It has more to do with believing in what you are selling and your ability to sell it than the actual environment you are selling in.

Coda1108

An excellent example! This goes back to "selling value." The truth is the value simply wasn't there to sell, therefore the higher price wasn't a value-sell. As one who puts integrity above all else, I also would not have been able to sell these. Actually, I would have looked for a job with the lower cost hurricane shutters and used my experience to demonstrate to value of those shutters based on their proven worth during previous hurricanes.

Thanks for the great perspective.

Snowman

AZBroker

A few years ago I took on a commercial listing that had been on the market for one year without an offer. I let the seller know that in my opinion the reason the property hadn't sold was because it was underpriced. He agreed to list the property at 125% of the previous list price. We had two offers within 30 days which resulted in a bidding war and a closed transaction within 90 days.

Snowman

Ironic, it makes sense though; if the price is too low can that cause suspicion?

As in, “what’s the catch or what’s wrong with it”?

rlabston

I'm starting to wonder if people ever sell to the same person twice. Reputation should be a greater fact than price unless there is no reputation. I would not be suspicious of someone I knew and trusted because he was offering a low price. Nor would I buy from someone whose reputation I knew to be questionable because his price was higher.