I was at a networking meeting recently and one of the attendees asked me to have a chat with him about some work his business was being asked to quote for. He wanted to discuss what he should charge.
He’s really good at what he does and this was a potentially his biggest piece of work to date. We needed to work on him being comfortable deciding what he would charge.
There’s a positive and a negative in this example. The negative is if we have a concern about price it will become an issue. The positive is that if we build value and focus on the customer’s objectives then price is unlikely to be an issue.
Building the value is the piece that so often gets a lack of attention. We need to be thorough in our investigation and truly understand what this represents to our customer. Having built compelling reasons we can then make our recommendation.
Confidence is a major factor here. The trap is that the fearful salesperson makes an assumption about what the customer may choose. They make a judgement that the customer won’t want or be able to afford the best option, so they go in with a lower level recommendation.
There are several reasons they do this: they are under pressure to make quota and need to make the deal. The salesperson may even personally believe that the best option is too expensive. They might think that the way to go is to start small and grow the relationship.
There’s a simple way to get round this- let the customer decide! Present the best option as if money didn’t matter. Imagine if what you did was for free -what would be the best recommendation for that customer and you’ll be more likely to make the best value recommendation- then apply the appropriate price.
Whilst we were discussing the opportunity we talked about the risk of lower pricing: The customer perceives that it seems cheap and gets concerned there may be a quality issue/ be the wrong solution and reject the proposal. So you de-select yourself from being considered achieving the opposite to the desired effect of being enticing by offering a low rate!
Plus if you are chosen based on pricing it will always be about pricing- there is a risk that someone else will undercut you and become the supplier…
I asked my connection the following questions to help him decide what to do:
“Are you qualified to do the work?”
“Have you done this kind of thing before?”
“Can you demonstrate it with social proof- case studies, testimonials, personal references?”
“What can you offer that is unique/ more relevant to the customer and which justifies a premium?”
“Was the enquiry through recommendation?”
He was able to answer yes and give examples to all these questions and therefore could confidently justify a premium rate for the work. Which he has subsequently been chosen to deliver, the result- happy customer and happy supplier!
Are you or your sales people missing out on opportunities due to lower pricing? Is there variance between the average order value between your salespeople?