Sales Training Tip #301: What is Low Price Costing You?

You can win on price, but doing so will cost you a loss in profit.

This point is hard to grasp for people who are struggling to keep their head above water. Yet, no matter how tempting it is to cut your price to close a deal, you are ultimately destroying your short-term and long-term profit margin. The majority of time when you cut your price, you are still going to deliver to the customer what they expected, but you’ll be doing it in a way that can only mean a cut in your profit.

The argument I hear for this approach is that a sale at a lower price is better than no sale at all. To that I respond, “No!” The reduction in profit occurs not just for the sale at hand, but for every future sale. The customer’s expectation is now that they will always receive the lower price. What is even more damaging is how this wrecks your sales model. Once you are willing to go forward with a discounted price, you will be more likely to do this time and time again. Before you know it, every sale you make will be at the new lower price. Doing this almost immediately negates the value you bring.

As a salesperson, your job is to help the customer see and understand the full value of what you provide them. Anything less than that is merely cheapening your skill set. I could go on and on with this topic, because I am very passionate about it. I know from my own experience the temptation to discount a price can be very alluring. In my business, I know I have lost customers because I have not been willing to discount. However, at the same time, I have picked up business because of my assertive stance. My sales model allows the customer to see and understand the full value of what they receive from me. When they comprehend this, they are willing and eager to do business with me.

As for the customers I have lost because I wouldn’t discount a price, I always strive to remember that if I would have offered a lower price, that would quickly have become the customer’s expectation every time. Just like you, I do not need more low-profit customers.

Interested in reading more on this topic? Visit my resource section on my website, where I have articles on the effects of price discounting.

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