You may not have had the term “cash-flow pricing,” so let me explain.
Cash-flow pricing is a term I use to describe desperate salespeople and business owners who feel it is better to get a sale that will yield little to no margin than it is to get no sale at all.
I call this “cash-flow pricing” because what the salesperson is saying is they’re willing to forgo profit just to close a sale that will help generate a little bit of cash.
It’s a sad comment, but there are far too many salespeople and companies using this approach right now.
Their argument is that generating cash flow is better than going out of business. The argument continues with the idea that if they can just hang on long enough, things will turn around because either business will pick up or a competitor will go out of business.
Gee, what an exciting way to approach business?
The only thing that really happens is you wind up kicking the can down the road without accomplishing anything other than delaying having to make the tough decisions.
When you make decisions about price based off cash flow, you can argue that at least you get to keep the doors of the business open a little longer.
Yes, but at the same time you allow your resources, including your own time, to get sucked away from trying to develop profitable business.
Once a company or a salesperson starts down the path of cash flow pricing, it can be very difficult to turn things around. The reason I believe this is true is due to people becoming conditioned to think the highest price they can get is the low cash-flow price.
When this happens, everyone — including customers — lose confidence in the value and benefit of what it is you’re selling.
You fight back against cash-flow pricing by never even starting to go down that path.
Spend more resources and time developing your prospecting base and expanding the benefit/value proposition of what it is you offer.
In the coming weeks, I’ll be digging into this issue more and sharing ways you can position your benefit/value statement to allow you to achieve a higher price. This is one of the biggest topics I get emails on.
Feel free to drop me an email or call me at 402-445-2110, and I’ll be happy to share with you specific things you can do based on your specific needs.
Copyright 2012, Mark Hunter “The Sales Hunter.” Sales Motivation Blog.