Price is just an arbitrary scale for the ‘unquantifiables’ which has only two functions:
- it is a reflection of the amount someone is prepared to sell something for.
- It is a relative measure, helping you to make purchase choices by giving you and the seller a constant scale and language to reach an agreed point of exchange.
How often do you choose a restaurant because it is the cheapest?
You might decide to go Italian, or Chinese, then decide which one. You decide on a variety of factors, parking, quality of the food and service, are they licenced, who is it that is going with you, is it a special occasion or just a meal. The conversation in your mind goes on and on, often almost unnoticed.
Why is it then that we tend to make major commercial decisions on price?
Almost every time I am involved with a client in a commercial purchase decision, one party or another uses price as a major point of choice and often leverage
Why?
Few people buy purely on price, and often you would not want them as a customer anyway, so why let them hammer you down?
Think about the value, what it is that the product or service is delivering, how it solves a problem, how it reflects the image to be projected, how it fits in with everything else going on.
Price is just a means to come to a point where the value can be exchanged.
Value is what is important, price is just a way of converting value to a common language.
Next time you are being belted about how high your prices are, agree, they are high, but they deserve to be because of the value delivered.
Just talk about the value.
Talk persuasively about value, and price will become a result, not a driver of the decision.
The real challenge is to figure out how to do this in a situation where the other party has all the power. A small supplier selling to one of the Australian supermarket gorillas has little leverage, the definitions of ‘Value’ will never be easily reconciled, so the hard choice is to walk away, and deliver value to customers outside the supermarket system.
Header credit allanandallen.com
