© Copyright 2004                               When Your Prospect Says Your Price Is Too High What Do You Say? by Bill Brooks How often do you hear this familiar response? If you're like most salespeople you hear it far more often than you would like to hear it. Unless, of course, your price is so low that your customers don't want the secret to get out! Everything has a price. The question is simply this: What is someone willing to pay to get it? But there are other, more important questions, too. Like: What are you willing to comfortably ask for your product? Are you really sold on your product, its price and value? Are you prepared to - and capable of - defending your price? What is your product's perceived value to your customer? What are the benefits and the long-term payoff of ownership to your prospect or customer? Who are you selling your product to-do they appreciate value-or are they purely a commodity buyer? How capable are you of presenting your product in such a way that it will never be seen as a commodity? Are you entering accounts too low-so low that every purchase decision is driven by price? Let's take a look at some basics as they relate to your ability to present, justify and ultimately withstand the inevitable price assault that will be made on you and your price. Here they are: Never prematurely present your price until you are in a position to justify how its' perceived value exceeds your asking price. If you prematurely or incorrectly present your price you will never be able to justify it to your customer. Unless you're sold, no one else will be either. Bottom line? If you don't legitimately, 100%, all of the time, believe your price is fair for what you are offering you will never present it with conviction. Never give the impression that your price is negotiable or that you are not presenting your best price the first time for every customer. Always be ready to justify and defend any assault on your price. Be in a position to explain how the benefits of ownership far outweigh the initial price of acquisition and the cost of ownership. The biggest lesson of all is to understand the power of gross margin. Gross margin is your selling price less cost of goods. The one, single secret to long term success in sales is to understand that it is from this gross margin that commissions, bonuses, profit sharing, 401K plans, incentive trips, recognition programs and all else are ultimately paid! The one, single person who can control gross margin is you! You can lose the entire ballgame in 45 seconds of poor negotiation. You can erode the entire profit picture by caving into pressure, gamesmanship, threats or intimidation on the part of a prospect or customer. One of the secrets is to master the following five strategies for maintaining margin and price. And here they are: Remember that the selling price you initially settle for is the one you'll establish as the ongoing standard for subsequent purchases. And this is true whether it is a high or low price! Remember that you should never present price until you understand what your prospect or customer perceives as value. And only then should you present price as related to the benefits they'll receive in relationship to that value. Always differentiate between initial price and the long-term cost of ownership. This is particularly true as compared to your competitor's price and cost structure. Never cave into price cutting attempts. The only real way to do this is to have an ongoing supply of qualified prospects who are willing to pay your price and to be able to justify your price, reinterpret its value and then be willing to refuse to do business if it is not profitable enough. You must know your cost structure and margins as well as you know your own name. You must know which components carry the highest perceived value and lowest cost - this is the only area for negotiation - and negotiate only on those items if you must, and then only as an ultimate, last resort. Several years ago my property was annexed by the City of Greensboro. I had no choice in the matter. I discussed it with several city employees. To this day they have not convinced me of the value that I am receiving for the doubling of my taxes. Perhaps if they had learned about the power of questions, understanding what I perceived as value, were able to justify the increased price and long term cost of the taxes, I would be a happy city resident. Unfortunately, that never happened. Fortunately for them the law was on their side. Unlike your customers, though, I didn't have a choice. Your customers, unlike unhappy taxpayers, do have a choice. And in the absence of value, they will actively seek another supplier. Don't give them a reason to do that. Sell value - not price! Bill Brooks is CEO of The Brooks Group, an international sales training and business growth firm based in Greensboro NC. For more information visit www.thebrooksgroup.com. If you would like to receive The Brooks Group's free e-mail monthly sales or sales management newsletter e-mail: Barbara@thebrooksgroup.com or call The Brooks Group at 800-633-7762.