Selling Value vs. Price

Selling Value vs. Price

Most salespeople are extremely generous. We give away a lot and often. It’s not at all unusual for salespeople to spend over 25% of their waking hours performing services for their customers for free. But just the other day I met an especially talented salesperson who performed drafting services for his customers, again, for free.

Several years ago, I heard one of my heroes in the training profession, Jeff Blackman, give an intriguing account of what happens to us when we fail to properly package the value either the salesperson or the company has to offer. The following is excerpted from one of Blackman’s presentations:

Whatever the required investment for your product or service, you should always, always deliver more in perceived value than you take in actual cash value. Let me repeat that. You should always deliver more in perceived value than you take in actual cash value.

Here is another key point about value. In the absence of a value barometer, the relationship is reduced to a price eliminator.

One more time. In the absence of a value barometer, the relationship is reduced to a price eliminator.

For example: If your buyers believe your price is too high and is not justified by the value you are providing, they will use price to eliminate you. And what if they think your value far exceeds the price or fee that you are asking? They may again still eliminate you. Why? Because they are probably wondering what’s wrong? Once again, what’s the result? They may graciously decline. Therefore, in the absence of a value barometer, the relationship is reduced to a price eliminator.

Perceived value is an interesting phenomena. About 15 years ago, a friend gave me a little card that I have made it a point to hang onto. The card is called VALUES by John Buskin:

VALUES

“It’s unwise to pay too much, but it is unwise to pay too little.

When you pay too much, you lose a little money. That is all. When you pay too little, you sometimes lose everything, because the thing you bought was incapable of doing the thing you bought it to do.

The common law of business balance prohibits paying a little and getting a lot. It can’t be done. If you deal with the lowest bidder, it is well to add something for the risk you run. And, if you do that, you’ll have enough to pay for something better.”

Try this idea to build value with clients over the long-term:

First, have you ever given a client a product, a service or even consulting time for nothing? I thought so.

Next time, if you are going to give a client something for free; that is, something that you and they would normally expect them to pay for or something that has perceived value, send them a bill.

That’s right. Send them a bill, but cross out the amount they would have paid and indicate “no charge.” Scribble across the statement, “This one’s on us. No payment due. This is part of our commitment to better serve you.”

Or, use whatever language you’d like that quickly conveys the message that your client could have invested this actual amount. Instead he or she saved whatever amount you chose to put on the invoice.

Why is this approach so effective? First, it lets your clients know that you made an actual investment to provide a product or service. Secondly, it reduces the potential that the buyer will try to repeatedly get something for nothing.

But most importantly, what this strategy really does is create in a demonstrable way a business advantage called “psychic debt.” And, wouldn’t you agree the satisfaction of that debt is going to have a significantly greater value over the long-term then the few extra dollars you might have earned from the payment of that one bill.

If you give this idea a try, send me your feedback and let me know how well it worked for you.