The recession may cause consumers to be a bit more frugal in their spending decisions these days. However, there have always been buyers who play the pricing game even in a great economy. I am not an advocate of lowering price to undercut your competition. That only leads you, the seller, into the pricing trap. If all you talk about with the buyer is price, there is no price that is going to be low enough. However, if the buyer did not understand the value of your company or they did not share those values you offer, then it is only natural for the buyer to choose your lower priced competitor. Before asking yourself, “how can we lower our prices?” I would recommend to first thoroughly explore the question: How can we add more value to our customers?

 

People’s reaction to price is based on what they perceive as the value. If the benefits to the buyer are greater than the price, then the price will be well worth it. But, if the benefits do not resonate with the buyer, or worse yet, the buyer does not understand any benefit, then that is when they will perceive the price to be too expensive or not worth it.

 

Understand that people want to feel good about their purchase. They want to feel that they didn’t pay more than they could have, would have or should have paid otherwise. Your job as the seller is not to make them feel good about the price by lowering the price, but to help buyers feel good about the price by raising the value.

 

How does one do that? Let’s take for example a case in point of a pricing expedition from my own life as the buyer. One year, I chose the lowest priced landscaping service to replace my previous landscaper who retired and moved to Florida. I mentioned to my new service provider where I had planted perennials throughout the property. When the summer weeds kicked into high gear I noticed, in great dismay, that his crew were pulling out and throwing away all of my perennials that I painfully labored to plant back in the fall. My perennial conversation with the owner obviously got lost in translation – literally. I was not even able to halt their destruction since there was a language barrier with the crew. The next time I made sure I looked for a crew who I could communicate with, but also for workers who could tell the difference between a weed and a flower. So, here was a case where I paid a higher price in the long run for choosing the lowest price in the short run.

 

So, back to the question, how can you create more value? Well, one way is to educate your customers on why they could end up paying more in the long run if they go with some of the other lower priced options. In this landscaping case, not only did I, the buyer, waste money when the crew threw away all of my perennials, but I also had the constant frustration of not being able to communicate quickly to re-direct their work.

 

Collect customer stories of their most frustrating experiences - that is, of course - before they found you. Then, share those stories with your prospective buyers to illustrate the importance of the value that only you and your company can deliver.

 

Another way to create high value is to be effective at alleviating your buyer’s pain. What are their top pet peeves about companies like yours? (This is also known as buyer’s remorse). What are their fears? (This is also known as the fear of the unknown). What kinds of guarantees, warranties or promises can you make to alleviate those fears? Be prepared to deliver on those promises to establish your company’s reputation of delivering high value.

Overall, keep the conversations with the buyers focused on value and focused on what they specifically value. If you ask them they will tell you how to sell to them.

Written originally for w2wlink by Yoon Cannon. For a free 15-min price-value consultation,  contact the author.