Figuring out what to charge for your product may seem as simple as adding up what it costs to make plus a percentage you call profit. Unfortunately, this “markup” or “cost-plus” method is common and can result in money left on the table and unnecessarily slower future growth.
If you aren’t selling on value, you are leaving money on the table. The question is, how much? Let’s go through the three problems with not selling based on value. Each of these events result in lost revenue and profits. Altogether, it can add up to a significant amount of profit lost.
Traditional sales techniques have always concentrated on closing the sale. Once the sale was complete, there was no further reason to engage with the customer until you had another product to sell. Until a few years ago, software solutions were sold the same way.
While it may seem like customers only focus on price, many of them actually place a higher importance on other attributes. By skillfully framing the conversation using your knowledge of those attributes, you can move their focus from price to value.
If you want to increase your average deal size, the best thing you can do is learn to sell based on value. That’s because a value-based selling approach helps you justify your price and expand cross-selling and upselling opportunities. Here’s how it works.
Is your offering underpriced? It happens more often than you’d think. For example, during a recent consulting project, I helped a particular business unit at a material manufacturer realize they were charging $100,000 for an offering that was delivering $1.2 million in value.
One of my fundamental beliefs is that the strategic marketing team—not sales, finance or operations—should own pricing. The reason is that marketing is best equipped to set the optimal price and maximize an offering's lifetime value.
It’s happened to the best of us. You tell a prospect how much your product or service costs and they respond with silence. This is known as “sticker shock” and if you’ve done your job as a salesperson, your customer should never experience this.
Last week we discussed how salespeople can overcome objections related to price. Now we want to address how marketing can support sales’ efforts. For marketers, problems with price typically show up in the following ways: You’re hearing too many requests from the sales team for discounts or price exceptions. Your average selling price is falling below your target price. Here are three things marketing can do to keep pricing from becoming a systemic challenge. 1) Help sales secure budget approval. Salespeople often run into trouble near the end of the buying cycle, when they’re trying to secure budget approval from a finance team. Without a solid business case to justify the cost of investing in your offering, the deal can fall apart.
Customers and prospects often lean on price as an objection for why they don’t want to do business with you. Here are some common things you might hear from customers. We can’t afford it right now. Our budget just got cut. Your competitor is offering a discount. I need my director to sign off on a purchase this size. Overcoming objections like these is a lot easier when you understand how to approach the issue of price. Here are three tips that can help.
