My readers know how dangerous it is to discount your prices for the wrong reasons.. but what are “the wrong (and right) reasons”? Each dollar discounted is a dollar sucked from your profit line and deposited on your customer’s so how do you know when doing so is called for, and how to do it in the most advantageous way?
Even more important: How does your organization make these critical decisions?
Let me share some questions to help you evaluate your sales organization’s level of ”excessive discounting risk”:
- Do you have a system to determine when you could raise your price and still win? If not, you can’t know if you need to discount a deal .
- Can you describe your product/service’s value – in dollars — to your customer? If not, how can you talk about price to that customer – much less consider any discounts.
- Do your people think holding price means putting on a game face or being a tough negotiator? Or is it a matter of knowing your customer, clarifying your offer’s value through the entire selling process…then being a win-win sales professional?
- Can you price productively at a “high” price which your customer understands and justifies for themselves? Doing so supports a better win-win outcome, and higher loyalty than a lower price that the customer hasn’t justified.
- Have you never been told your price is too high? If not, it’s too low.
- Do your sales people treat the words “your price is too high” as “your value is too low”, and then sell accordingly? If not, why not?
- What is your process for approving price concessions? Are some sales people more successful at gaining discounts than others? Why?
- Do you know how to coach sales people to establish and measure customer-perceived value? Can you objectively tell when a salesperson does it well or not? Can your salespeople communicate customer value to each other, to their managers, and to service, design, and engineering teams?
Remember: Anyone who’s ever invested time and energy to tell you your price is too high has already proven they’re willing to spend time and energy discovering why your price is worth it. Your people better have the tools to help them out.
Share your thoughts below, or contact me to discuss your reactions to these questions.
To your success!