If you read in a business article that price is not the sole determinant of purchase, be very careful. I’ve made that statement myself but there a million traps in that thinking. The more similar product A is to Product B, the more price pressure will be on both sellers. The trick becomes trying to identify the utility that will tip the buyer into your camp. What other factor has value to the buyer other than price? Can it be quantified?
I’m not saying that it still comes down to price. But if we never put a value on those other factors, how do we ever determine a true price for what we are providing?
Sometimes, getting it NOW has value that can overcome a price difference. Sometimes, in certain situations, ‘getting it now’ can be worth a steep premium. That’s only one utility. There are others.
If you haven’t considered what other factors (utilities) matter to your potential customers, you are missing sales. These “other” factors have value—maybe a lot of value. Sometimes we lose sales because we fail to consider these utilities. Sometimes we lose margin unnecessarily.
Start simple. If you are preparing a quote or proposal, list 3 things that are important to the potential customer in addition to price. Then, try to put a value on each item—from the prospects perspective. Now, will you adjust your pricing? Maybe.
Maybe you just need to emphasize the added values. Maybe you can offer to remove those additional utilities in exchange for a price drop. You’ll discover that most people will not want to give up a utility they think they need.
Explore this and you’ll find a lot of change in the cushions.
Chris Reich, TeachU.com