You’re on a sales call when the prospect asks one of the most dreaded questions in sales: How much does it cost? What do you say? If your number is too high, you might put yourself at a competitive disadvantage. If your number is too low, the prospect might conclude your product isn’t robust enough. Dodge the question and the prospect likely will get annoyed. It’s a lose-lose-lose question. Or is it? In his book, The New Era of Salesmanship (QBS Publishing, 2005), Thomas Freese argues that price and cost is not the same thing. Sales reps who can show their product provides the best value for the lowest cost, he says, likely will win the business. Here are two of his points to consider.
1. Price and cost are not the same. The true cost of a product or service includes a wide range of factors other than price, such as amenities, upgradeability, required education, membership fees, depreciation, maintenance and so on. There’s also the cost of not making a decision or not purchasing your product. Likewise, there’s the cost of making a bad decision. For example, the cost of bringing in an inexperienced consultant at a low price could wind up being far greater than paying more for an experienced consultant who can solve a problem in a few days. Your job as a salesperson, says Freese, is to set up an apples-to-apples comparison so prospective customers understand the differences in value they’ll get with the differences in quoted prices.
2. Never justify a higher price. You’re already losing the sale when you find yourself saying: Yes, our product is more expensive, but it’s worth it because…. When you position your product as being more expensive than a competitor’s, you run the risk of customers thinking you provide similar value at a much higher cost. Instead, says Freese, position your product or service as being less expensive, not more. When sales reps for Immersion Medical are asked how much one of their clinical simulation devices cost, Freese says they answer by saying: If you take into account the increased productivity gained by ramping up clinicians more quickly, coupled with lower error rates, fewer complications and higher reimbursement rates from JAHCO accreditation, this unit could save the hospital $200,000 over the next two years…at a price of only $28,000.