One reason people don’t buy from us is because they think our product is too expensive. Maybe they are right … for them. Maybe they are right for their circumstance. Maybe they are right given what they know.
Let’s break down what “It’s too expensive” could really mean.
First, it could be they can’t afford it. It doesn’t fit into their budget. I’d love to have a brand new Cirrus SR22 airplane, but I can’t afford it. That doesn’t mean an SR22 is too expensive for everybody. It doesn’t mean Cirrus should lower the price. They have a market segment they serve that can afford their plane. From Cirrus’s perspective, it means I’m not their customer.
Second, it could be that the buyer found an alternative that was better for the money. Imagine two nearly identical products, but your competitor’s is much less expensive. That makes your product look too expensive. Even if your product is better, it’s possible that the ways it is better don’t matter to that buyer. This means you should build in differentiation and find buyers who value your advantages.
Third, it could be the buyer doesn’t understand the value of the product. Your product is probably better than your competitor‘s, but if your buyer doesn’t know that, they see your product as the same and hence “too expensive.” You must communicate the value of your differentiation.
Like everything in pricing, we have to break down what we hear into what decision is being made, what the buyer values, and what information he or she has. That analysis helps us determine what actions, if any, we should take.
Can you think of other reasons someone would say, “It’s too expensive?” Share your comments on the LinkedIn post.
Now, go make an impact.Tags: pricing, pricing foundations, pricing skills, pricing value, value