40. How can you justify rather than discount?

If you don't know the reasons that justify your price, it is important to find out what those reasons are.

The business department of a major university conducted a test on 100 companies.  They divided them into three groups according to how they sold.

The first group of 30 companies sold strictly on price.  The sales people had as much flexibility as they felt they needed to get the business.

The second group of 40 companies was allowed to give heavily controlled price discounts.

The third group of 30 companies gave no discounts and sold at book price.

The results...

Group one sold the least amount on a per sales person basis, earned less gross profit, return on investment was the poorest in the industry.  Price buyers would search for the sales people who sell on price and try to squeeze the price even lower.   The sales people constantly complained that there was no loyalty among buyers.

Group two had a higher sales per person than group one, earned a higher gross profit and had a better return on investment. The sales people complained that if they had lower prices they could sell more.

Group three had the highest per person sales, the highest gross profit and the best return on investment. THE SALES PEOPLE WERE BETTER TRAINED IN SELLING STRATEGIES AND WERE ABLE JUSTIFY THEIR PRICE RATHER THAN DISCOUNT IT!

Here are some of the things a sales person might say to justify the price:

"Yes, our price is higher - but our product has longer shelf life.  You will never lose any money because of spoilage.  We get it in and out of our warehouse and onto your shelf faster than any other distributor.”

Then show them the comparative figures on spoilage.  Highlight this benefit they cannot get anywhere else.

Or you might say:  "Yes, our machine costs $30 more-but other machines can cost you twice that $30 saving every few months in repairs.   Here are the frequency of repair records for our machine and for our two top competitors.  "Show him the figures-and then make your big point.  'A machine that hardly ever needs service and repairs is a tremendous advantage today, when service is so expensive and hard to come by. ”

Here are some reasons your buyers will pay more for.

When your customer trusts and knows what to expect from you, you gain an advantage. Consistent quality, delivery, service, and constant innovation create exceptional value in a sale.

When you can demonstrate that your products are guaranteed to arrive in perfect condition, you increase your value.

When a customer perceives that your company responds instantly to their problem, the customer will do business with you again.

Your product may cost less for operator training, a lower cost to run, and reduced cost to repair than a competitive offering.

Customers will select a technically sound company over one that's obsolete or on the brink of failure.

Your customer will pay more to eliminate and avoid headaches.

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