It happens often. Your customer tells you the only thing that matters to them is “price”. And you accept this, because somehow this makes logical sense. Price is how much your service costs the customer and by driving down cost, the customer can make more money.

So the lower your price, the easier the customer will buy from you because the more profit they can make from you.

But wait, let’s go back to how the customer thinks: they are essentially drawing up a mini income statement in their head and your product’s price earns itself an entry straight into the expense column together will all the other costs in their business. And cost is a drain on profit, hence the constant pressure to cut your price.

But what if you can play on the other side of the income statement and help the customer make money with your product? What if your offering can become a source of more income, instead of more cost? Suddenly you are giving the customer a reason to think beyond the price of your product and giving them items of value to add to the other side of their imaginary income statement. You have gone from being only a debit, to being a debit and a credit.

Suddenly the lowest price is not the sole determinant of profit, but the amount of value you offer. Price becomes secondary.

This is one reason why many manufacturers buy German machinery instead of Chinese. The former is more expensive, but the net effect is often more profitable due less maintenance and higher reliability.

When you and your customer are continuously fighting over price, know one thing: you are only playing on one side of the income statement. Ask yourself the question: how do we play on both sides?

Here are some pointers to common areas of value add:

  • Faster turn around time

  • Better after sales support

  • Longer warranty period

  • Less out of stocks

  • Faster order processing

  • Quicker delivery times

  • Better payment terms

Offer any of these, and you are able to have a far more balanced discussion with your customer about price. You may even be able to raise your price and boost their profits.

 

Image source: 

https://www.flickr.com/photos/evoo73/