How To Overcome Price Based Competition?
“Commodities sell on price alone. Everything else can be sold at a better price”.
Have you ever seen a potential client with a pained look on their face?
Or just not ever heard back from a potential client. It’s very likely you’re have failed to fully persuade the person about the value of your product or service. In other words, the client has suffered price shock.
The good news is that most people do not buy on price alone. However you need to give them valid reasons why your product or service is excellent value for money. That is, they get more in real/perceived value, than they pay you in dollars.
Here are my top 9 tips to sway the price decision in your favour:
1. Only sell to the clients and niches who can get the greatest possible benefit from what you offer.
e.g. If you’re a web designer a commercial architect will benefit more from a new website than say a local fruit shop would.
2. Develop your offer so the client gets a 4-10 time return in perceived value. Ideal where you can quantify financial returns.
e.g. For every dollar you spend on advertising with XYZ we guarantee you will get $4-$10 back if not you don’t need to pay us for the ads.
3. Understand the underlying problem you solve or the gain achieved by your clients and the ‘true’ value of it.
e.g. If you’re a marriage counsellor the true value you provide is potentially saving marriages. Divorce is expensive. So if you save people from that the true value of what you do is enormous.
4. Break down your price into an easy frame of reference.
e.g. Instead of $120 a month say for just the cost of a cup of coffee each day you get XYZ benefits.
5. Apples to oranges comparison. Great for where you are quoting/pitching for a client against others. Getting quotes right can make a massive difference to how many leads you convert into paying clients.
e.g. You need to ensure your quote is very detailed about things that matter to the client. Add detail about what you do and how the client benefits. The more perceived value you add the harder it is to compare quotes because each quote is not really offering the same thing.
6. Reverse client risk.
e.g. In any sale there is real and perceived risk. The less you ask the client to take risk the easier it is for them to say yes. Find ways to guarantee what you do. The more powerful your guarantee the more sales you will close.
7. Have a unique process. Great for services businesses.
e.g. Put your process together with a unique name and make a visual diagram of it. Let clients know this is the way to do what you do right. Ask them if the competition do it and if not why not? It stacks the odds dramatically in your favour.
8. Add really valuable bonuses.
e.g. I have seen people buy a product or service just to get the bonuses because they were so desirable. So consider if there is a way you can add bonuses to your core product or service that cost you very little but have high perceived value to the client.
9. Provide a few options.
e.g. Don’t overwhelm clients with choice or they will run for the hills. However do give them 2-3 options to choose from. A fantastic way to do this is to offer a basic, better and best. Out all the value in the best and make the increase in price a moderate step up from the middle option. Most will go for the middle option but some will upgrade to the ‘best’ and it will add a lot to your bottom line.
Here’s a bonus tip for handling a price objection either over the phone or in person. Let’s assume the potential client has said you’re too expensive. You can counter with something like “Can I ask you is price the single most important thing for you about choosing (insert your product or service here)?” Then you must pause and not speak. Let them speak first. Most of the time they will feel a bit awkward and say well, no. At that point you can come back in and say “Great I didn’t think so, let me remind you about everything you’re getting with us.” You may just save a few sales with this simple approach, many businesses have.
William Siebler is the owner of Seo Melbourne, helping smart businesses to double their returns on their current marketing spend.