Knowledge Center


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.

About the Author:

 

Mark Hunter, "The Sales Hunter," helps individuals and companies identify better prospects, close more sales, and profitably build more long-term customer relationships."

Mark Hunter has spent almost 30 years in sales, formerly working for three Fortune 100 companies, and currently as a sales consultant and motivational speaker. He has managed sales territories worth more than $200 million in annual sales, as well as directed more than 200 sales people and $700 million in annual sales.



Latest Articles
Most Read
PODCAST: SalesProChat, "What is Sales Compensation and How Does it Motivate Sales Pros?"
PODCAST TRANSCRIPTION: SalesProChat, "Sales Compensation"
CPSA DigiTalks Webinar Recording: 10 Questions To Ask About Your Sales Compensation Plan
NEW FROM THE CPSA: Sales Compensation Reports for Sales Pros & Sales Management