Ask a salesperson why we lost a deal and you will almost certainly hear one of two different answers:
1. The product wasn’t good enough.
2. The price was too high.
These aren’t far from the truth, but allow me to modify them a little bit.
First, it wasn’t that the product wasn’t good enough, it was really that the buyer didn’t see enough value in the product. Maybe that’s because the product really wasn’t good enough. But maybe it’s because the buyer didn’t realize how much value the product would deliver.
Second, the price obviously was too high. Every deal we lose it’s because the price is too high. If we lowered the price enough, we could probably get them to buy. But that goes against our objective of making a profit.
Instead of saying it was one reason or the other, the right answer is it was both. The price was too high for the amount of value the buyer perceived. That means there are two ways to win more customers: lower prices or increased perceived value.
Assume with me that a product is priced correctly. Then, if a customer says the price is too high, that’s an indicator that marketing and/or sales have not been able to communicate the value. If a salesperson tells you the price is too high, he’s really telling you he can’t communicate the value.
Yes, it’s always possible that the price really is the reason, but before lowering the price, make sure you’re doing a great job of communicating value to your buyers.
As a company you should focus on increasing customer perceived value. You can do this with better products, better marketing, and better sales conversations.