Higher Prices Rule!!!

If your product is higher in price than your opposition then that’s a good thing!
Avoiding price till the end of a presentation is outdated in most cases.
Don’t shy away from higher prices, the way I handle it is to say;

“With advances in the __________business it makes good sense keep your knowledge of the latest developments and issues up to date to make sure you don’t miss anything.

As my product is about the most expensive on the market it is widely accepted as being the most complete package available and is definitely the leading product out there.

What we do is diagnose your needs and show you how our product can help you, if you can see the extra value then that’s great

At that stage you can either;

• Decide to take us up on our proposal..
• Decide to take a scaled down version of what we recommend.
• Or, stay with the company your with and ask them to change a few things based on what you’ve picked up from our proposal.

In any case our time spent together will be of real value to you………”

All you have to do is show them the value in spending more. -Tony Dunne

Why is it a good thing? -Seth

I guess a higher price could easily imply a higher quality of product or service which is exactly what some people want. You may not get many results in the lower income group but could do very well in other income groups. -ozzie

Michael Bloomburg is currently the fine Mayor of New York City.
Before he was Mayor, he built the Bloomburg empire (Information Services; there is now even a Bloomburg TV Channel of financial and other information).

Anyway, he was famous for saying that if something isn't selling well, RAISE the Price!!!! This increases the perceived value.

I agree whole-heartedly that while price is sometimes a limiting factor, one shouldn't go straight for price reduction, as it devalues what you're selling. Instead, find a less expensive solution to meet your buyer's needs. They'll respect this, and in the long run as they grow, so too will their relationship with you. -Coda1108

Higher prices are a good thing for the following reasons;

• Higher quality, usually less problems with product or service
• Potentially higher profit margin
• Usually better after sales support
• When things are tough in a market place buyers at the lower end of the scale tend to delay purchases
• Buyers that can afford more expensive investments tend to;

• Spend when things are tough so they can cheer themselves up
• When things are good they spend even more to celebrate!!!

My clients buy because they want what I sell, not because they need it.
What makes them want it?
It depends if their business is good or bad, as to whether they are buying to cheer themselves up or to celebrate. -Tony Dunne

Funny, I once heard that Mac Tools, a mechanic’s tool manufacturer, increased their sales by raising their prices 30%. It seems that though their quality was on par as compared to their closest competitor, customers perceived the overly large price difference to indicate that they were inferior.

Interesting,
Bill -Bill_Kistner

When a consumer knows little about a product price is frequently assumed as a measure of quality. -Liberty

Significant for this board is the realization that as salespeople, we need to sell the value of our product to our prospects. The answer to "That's a little pricey" should usually be... "Well let's look at the value of XYZ...." OR, even better... you should have already had an opportunity to go over why your product or service has value to your prospect. So instead of "Well let's look at the value of XYZ..." you can ask what about the value do you not perceive to be worth that price, and draw out the root of his or her objection.

Price is quite often an easy mask for a deeper objection. Getting through to that deeper objection is how you get to the emotion behind the purchase.

It's amazing to me how this really works!!! I once had this exact scenario with a now customer. After objecting on price, and my digging deeper, it turns out his real "value" was that he wanted to prove something to a colleague. Once I got that far, I agreed to change the presentation of our service and he went from prospect to customer! -Coda1108

We sell two different complete lines of skin care products. One is very reasonably priced and the other is quite a bit higher. I haven't sold a single item yet from the lower priced line. I myself choose to purchase the higher priced and higher quality items. -ozzie

I think you have it backwards. If your product is of superior quality, better service is provided etc, then the value of your product will justify the price. I think the old saying "you get what you pay for" is appropriate. If your product is priced higher than the competition, then you need to show your customers the value and benefits they will get from buying your product instead of going with a competitor.

So, a high price does not justify the product/service, but rather, a good quality product/service will justify a higher price. -MarkS

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. -Coda1108

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…;wi

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!!! -Tony Dunne

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

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. -rlabston

rlabston

Thanks for that perspective; ;sm 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 -Tony Dunne

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. -rlabston

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. -Coda1108

Good discussion, anyone else care to join in on this?;sm -Tony Dunne

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. ;wi -AZBroker

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

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

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. -rlabston

The original listed price WAS too low and did cause suspicion for the prospective buyers who didn't know any better.

In the end the buyers who purchased the property knew a good deal when they saw it.

IMO this is not an isolated case. I think it happens all the time in many if not all industries. -AZBroker

Good point AZ

Start high I say; you can always reduce your price mid sale but putting it up mid sale is almost impossible.:sa


Snowman -Tony Dunne

Wiki says, "Pricing is one of the four aspects of marketing. The other three parts of the marketing mix are product management, promotion, and distribution."

It looks like underpricing is as bad as overpricing. -Marcus

It can be. Correct pricing is important. If you price too low you could be leaving money on the table and potentially hurting your own sales. -AZBroker

Good point, AZ!!! I thought, when I was younger, that I was doing my customers a favor by charging lower prices. I soon found out that I was actually hurting my customers by not charging enough to stay in business. Customers don't want to be price-gouged, but they also want you to make enough money to still be in business when they have a problem with your product and need to come back to you for help.;wi -rlabston

We all know the golden rule right?

He who has the gold rules;wi -Tony Dunne

I agree Tony, I am finding in my current industry where my product is dearer - I find that my selling my solutions not the price is effective -Snowboy

Snap-On has made a 80 or 90 year business model out of being the highest priced tool on the market "We have to be the best because we are the most expensive." In reality just because you are the most expensive doesn't mean you are the best.

Pat -toolguy_35

The key is not whether your price is high or low, but the value you build. One of the biggest challenges in any sales presentation is building value. Showing the prospect that your product or service is of more value than the money that they are being asked to spend is never an easy task, but for a sales professional it is an essential one. Many sales professionals struggle with building value, so in an effort to compensate for the lack of value they build in the eyes of the prospect they discount on the price of the product or service. The result is a lower average sale price which directly impacts both the company’s profit margins and the sales professional’s paycheck.

To understand the way to build value in a sales presentation the sales professional must first understand the prospect’s perspective. Your prospect will be focused on one of two things in the sales presentation; either he or she will be focused on getting something (your product or service) or giving up something (money). Simply put, if the money the prospect is being asked to give for the product or service is perceived as a higher value than the product or service the sale will not occur. However, if the sales professional has built the value of the product or service up in the prospect’s eyes so that the product or service has a higher perceived value than the price that is being asked for it then there is a strong likely hood that the sale will take place. For example, imagine that during a sales presentation the sales professional built up the value of the product or service so that the prospect felt as if he or she was getting a $10 bill in exchange for a $5 bill. If this were to occur then the sale would be almost inevitable as the prospect’s focus is on what he or she is getting and not what they are giving up.

How does one build value? I just finished a white paper on this. If you would like to view please go to my blog: http://davidhoffeld.wordpress.com -Joeylean

Value is established in the mind of the buyer and I do believe that the more they pay the more they look for the value and supporting evidence that they are making a wise investment.

Nice work David thmbp2; -Tony Dunne

all this is good info thanks.
i m a personal trainer starting out and i ve had many people tell me that my price of €60 per hour is too high..i could cut my price to €45 or €50 like everyone else but what would be the point.
i give good value for money. i give more services than anyone else and i get the best results.
i ll reread and reread this post again to get it in my head.
thanks people -niallcore

There is a great deal of good advice here but we should not forget one of the very few real and true laws of commodification: the law of supply and demand. It is also called the "sweet spot" and marketing firms have spent decades studying this illusive focal point.

If someone raises their price and happens to sell more, that tells me they were under-priced in the first place. Conversly, if someone lowers their price and sells more, then they were overpriced in the first place. It is not the pricing that brings impact, for price is the final dynamic effect of a prior cause. That prior cause is the logic used that is driven by the prospects deeper beliefs.

Price effectiveness depends on what is being sold and to whom. Lowering the price of a new Bentley a few thousand dollars will not have much of an impact but can speak volumes when selling a low-end Ford or Chevrolet. At one end, price rules and at the other end is luxury--seasoned sales reps know that not all value is created equal.

Studies suggest focusing on the following considerations:

There is a functional logic of use-value. A Honda Civic or truck driven by Wisdom

There is an economic logic of exchange-value. Completive Price driven by Justification.

There is the logic of symbolic exchange-value. Reduced price driven by the Philanthropic experience.

There is the logic of sign-value. Social status found in a Bentley driven by Social Power -John Voris