End the Discounting Habit

Dear Team,

I wanted to share this article even though most of us do not discount our products, we many times face the price objection.

Some of you fear getting the price objection so much that you do not actively build your business. Or you try to build your business, but with the anticipated fear of the price objection, you subconsciously or consciously sabotage your own success by making excuses for the prices or apologizing for them.

It is important to understand that price objections are common in every industry and every product around the globe. It is also important to understand that price objections are simply a way of the consumer saying, "I don't understand the value of this product or service."

I always tell the story of the bread loaves and the baker. If you haven't already heard my baker analogy...

Imagine that you go into a grocery store each day after work. Each day you see a bread rack in the front of the store and it has two prices of bread - for the same bread. One is $1.00 and the other is $3.00.

Each time you need bread, you grab the $1.00 loaf. Never in your wildest imagination can you understand why someone would opt for the $3.00 bread over the $1.00 bread.

Then one day you go into the store and the baker is standing by the rack. You greet her and as you grab your $1.00 loaf, you out of curiosity ask, "Why is this bread a lesser price?"

The baker is happy to answer your question. She says, "I am glad you asked. You see, though these are the same breads with the same ingredients, the higher priced one is made from all organic ingredients that are fresh - not processed. Then the bread is baked at a temperature that allows the bread to cook fully, but not so as the ingredients lose their nutritional value. The other bread is still good bread - but basically it is empty calories."

Suddenly you look at the $1.00 loaf in your hand and realize it is not such a value after all.

This is the power of educating the consumer to make informed decisions!!


End the Discounting Habit
And other rules for pricing with confidence
by Reed K. Holden, DBA

I learned the danger of discounting the hard way when I started my consulting business fifteen years ago. We got a call from a company that seemed to be interested in our services. We lept at the opportunity and presented a solid proposal with what I felt was a fair fee. The prospective customer responded by asking for a lower fee. And when we lowered the fee, he asked for a still lower one.

That exchange led to a new conversation and a different proposal. The proposal focused on our understanding of the prospect's business pain, how our services would alleviate that pain, and how the prospect's business would directly benefit from the value our services added. A day later, with no more talk of discounts, the prospect gave us the engagement.

From that exchange, I learned a critical lesson. If all you talk about with customers is price, there is no price that is going to be low enough. Price is important, but there are considerations that must come first. We learned to start the conversation by talking about value. If the prospect still did not value that value, we were happy to let our competitor have the honor of serving him.

Some time later, we received a call from a senior executive at a large electronics company. The executive asked for our fee to train and prepare a sales team for a tough price negotiation with one of its largest and toughest customers. This executive knew our value. Nevertheless, when the fee offered was lower than we were prepared to accept, we did two things. First, we gave the executive the names of two consulting firms whose prices tended to be lower than ours. Second, we asked a question, "Do you regard this engagement as an expense or as an investment?"

The executive paused and then said he was thinking about it as an expense. That honest response gave us a chance to talk about the benefits of thinking about our services as an investment, one with ongoing payback for future negotiations. We booked the deal at our normal fee and went on to do a number of activities with that company.

Successful managers and salespeople know how they create value for customers and know how to change the discussion to value. The best companies know they have to display a little arrogance about the value they offer in order to send an important signal to potential buyers.

That signal is:
We are confident in the value we provide and, therefore, the prices we charge.

When your salespeople get asked for a lower price, what is their response? It should be some variation of, "What do you know about us and how confident are you that we can solve your business problem?" That's what I mean by replacing the discount habit with a little arrogance.
Arrogance, just a little, means that people, especially salespeople, feel confident about what their company offers and why it functions better on behalf of its customers. If they don't feel confident, how can you expect them to price with confidence? If you don't have the arrogance, give up discounting for a while and go out and talk to customers.

*Note from Candy... don't think of confidence as arrogance when it comes to ONE Group products. We are not quadrupling prices for mass profits, we are charging a fair price for high quality beautiful products. Additionally, remember to stand firm to your convictions. For example: If you are concerned about the environment - remember, our products are making the earth a safer, more inhabitable place for all creatures. (Always remember your WHY)

Talk to those who are using your products and services. Ask them a real simple question. Ask the question that you're afraid to ask because it may appear stupid: Why do you use our products? Listen closely to their answers. If these customers believe in your company, then maybe you had better believe in your company, too.

http://www.businessknowhow.com/money/discounting.htm