This morning my good friend George Pastidis (picture), Head of Sales Enablement at Ericsson, I read an excellent piece on price on his www.georgetalksales.com blog, that I recommend you follow.
Being in sales we all know the word “price” will be mentioned in our conversations with the buyer, either very early in the conversations or late, when negotiating.
Value = Benefits – Cost
Price is a parameter in the equation above hidde in the Cost element. Sales people often forget this, or even do not think of this.
Eroding margins, lost business, wasted time, lost market share etc…
We all expect this to come up in the conversation at some stage, and some sales people fear this moment, and have different ways of handling this, going on a continuum from unacceptable unilateral concessions way to early having and not build any value at all in the buyers mind, but accepting the buyers ask.
OR the outstanding seller that helped the buyer experience value by sharing business and industry insights on how to drive total cost of ownership down and share business models that will grow business and help the decision making unit look good, and then, if needed, negotiate and bargain based on mutiple negotiable issues, from a win/win and grow the pie mindset.
Therefor, I liked the guidelines that George share in his blog below.
Be inspired to help your customers outthink and outperform their competition:
Is the price right?
by George Pastidis
You have met with all the key players of your customer. You understand the needs and “buying agenda” of every single one. You delivered a presentation with the technical part of your solution and you’ve got the buy in. You are at the point that you have to submit your proposal, including costs. But one question bugs you: is the price right?
Here are few things to consider while reviewing your price:
Out-weight customer costs – with the proposed value. Sounds cliché but it is very true. Your price needs to be lower that the proposed value. And the proposed value needs to be quantified as much as possible.
Know competition’s prices – if you seem to be more expensive at first glance but your Total Cost of Ownership is better, show them why. Again, you must quantify that.
Avoid detailed price breakdowns – for being more flexible and able to bundle or de-bundle and trade things when negotiations come.
Few price options are good – but too many options can confuse your customers and make them indecisive.
Cannot make everybody happy – cause this is a two edged sword. If you meet the needs of all your key players, maybe you are about to deliver a monster proposal with a monster price that your customers might love but they won’t afford.
Save fat – this is good. Procurement will definitely negotiate you. But do not overprice, taking the risk to be eliminated at once.
Get in the customer shoes – think of any possible concern they might have and either redefine your pricing structure or prepare your counter-arguments.
Check with your sponsor – you must have a key player that you trust. A guy that you know she wants to see you winning this. Why don’t you share price informally, trying to understand how she feels about it?
Believe in your price – otherwise forget about it. If you are not convinced yourselves, you are going to convince nobody.
Out-weight your costs – we started saying that your proposed value should out-weight customer costs. It is equally important though, your price to out-weight your costs. Turnover is great but profitability is key today.