Paul shares his thoughts on presenting price.]
“Pricing builds perceived value. In the absence of additional information, price is the greatest indicator of quality and performance.”
Discounting and negotiating are part of every culture.
Pricing is an integrity issue. “If you present a price and then lower it, you’re effectively telling the customer ‘I was trying to overcharge you before'”
“Use the three words to present price…”
Don’t apologize for your price or stare off into space. Present your price matter-of-factly.
Buyers aren’t compensated to gain discounts; they’re evaluated on overall company profitability. Focus the conversation towards profit, not price.
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How do I present my price?
(Transcribed from podcast)
On today’s episode, we’re going to answer the question, “How do I present my price?” I’m a big fan of presenting your price by saying “the price is…,” and I mention that in Value Added Selling. We actually had someone from over in Europe somewhere (I forgot the country), but they emailed us and said, “I get the whole ‘the price is’ but how do you manage different cultures?” Their argument was that certain cultures or certain countries are more likely to negotiate and expect a discount. What I think is interesting, I’ve trained salespeople in several different countries – different cultures, and I can tell you, it’s not a cultural thing. Everyone likes to negotiate and everyone likes to ask for a discount, so the notion that maybe certain countries are more apt to ask for a discount or to negotiate… you know, maybe. But realistically, everyone is trying to negotiate price. That’s actually what launched Value Added Selling. That’s what we’re going to talk about today is how do we present our price.
Before we get into that… a quick shout-out to our sponsor, Andrea and The Creative Impostor Studios. They’ve been a part of the podcast since day one, and it’s continued to grow. The podcast has now been downloaded in 34 different countries, so it’s growing. You know, this is the next big thing in marketing, so if you’re interested in starting a podcast, reach out to Andrea and her team. We’re going to have links to her website on our website. So check it out.
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So let’s get started—back to this question. The salesperson read Value Added Selling, and they don’t necessarily agree with how I say to present price. My way of presenting price (the best way in my opinion to present price) is to present it matter-of-factly, THE PRICE IS. Think about that. It’s simple. It’s easy. It’s confident. But this one seller was making the case that… “Some of my customers expect me to negotiate. They expect me to give a one or two percent discount. They need my help. I try to support them.” I get all that. But when we’re presenting our price, it’s critical that we are confident and that we show no wavering in our price. That’s why I like using that phrase, the price is… That’s the way I recommend it
Sometimes people believe (purchasing people—the B2B buyer) that oftentimes they’re compensated or their performance is based on how many discounts they can get from vendors. Our research shows something different. Although discounting is common when you’re working with procurement-type people, you’ve got to remember that that’s not their main function—to just get discounts. We asked a group of buyers in one of our surveys, “How are you evaluated?” And the group of buyers said basically how they contribute to the profitability of the organization. That’s much different than attaining discounts from suppliers. I don’t believe that all buyers out there are looking for discounts because that’s how they’re compensated. No, instead, they’re doing this as a way to help drive profitability to their organization. One other thing to think about, when we’re talking about presenting our price, the customer might push back a little and say things like, “That’s the main price. What’s my price? What is my discount? What is this?” Keep in mind that how you behave, how you respond to that type of objection, is going to not only influence this interaction, but every interaction thereafter.
I really believe pricing is an integrity thing. When we lead with our best price and we explain all the value that we deliver and then the customer is given that price, we are putting our best foot forward. We’re giving them our best total solution. And so for us to take the price and lower it without changing the package, we’re effectively telling that customer, “Hey, I was overcharging you beforehand.” Think about that. One of the unintended consequences of discounting is when we do lower our price, we’re effectively telling the customer, “I was trying to rip you off beforehand.”
Another thing to think about… When buyers focus too much on price, it’s because they want to reduce their overall cost. And buyers, when they want to grow their organization’s profitability, there are several ways that they can do that. And so I would acknowledge that and talk to a buyer. If they’re giving you two many price objections, just say, “What’s driving this discount request? What are we really trying to accomplish here?” Get to the root cause. Figure out what they’re trying to do. They might tell you, “We’re trying to reduce overall costs,” or, “We’re trying to enhance profitability,” or, “We’re trying to figure out a new way to streamline different vendors.” Whatever it might be, get to the root cause of what’s going on. And then you can show them how you can help achieve what they’re trying to achieve. If they’re looking to reduce overall cost, there are better ways to do it than just reducing price.
Also, with presenting price, to me, pricing builds perceived value. In our last episode, we talked about packaging and if it really matters. And the answer is yes, of course, because packaging helps build in perceived value. But price also builds in perceived value. And in fact, in the absence of all other information, price is the greatest indicator of quality and performance.
I remember reading an article in the Wall Street Journal several years ago, but it always stuck with me. It was an article about our biases and how it relates to price. They had a bunch of wine critics. These wine critics tasted some wine. They didn’t know how much the bottles of wine actually would cost. Then they rated all those bottles of wine. Now another group of wine critics were given the same bottles of wine, only they were told how much each bottle of wine would cost in a wine shop. Now what’s interesting, the group that didn’t know the price ranked the mid-tier wine as the best tasting. But the group that was made aware of the price chose the most expensive bottle as the highest rated bottle of wine. You can tell what happened. They used price as a means to influence their opinion about the actual wine. So when we’re presenting our price, in that context, I would say it can be a good thing to be higher than your competition. It can be a good thing because that builds in perceived value.
So those are just a couple of thoughts on how to present price. Remember the words THE PRICE IS.
A couple things to remember, don’t apologize for your price. I often hear salespeople say, “I’m really sorry, but this is the best we can do.” You’re already apologizing for the price. Don’t do that. Don’t stare off into space or look at your shoes when you’re trying to present your price. Look them straight in the eye and say THE PRICE IS.
Make it a big day.