Price

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I try to write about three times per week. Most of it is pretty good and will probably help you grow your business. If it doesn't, then I probably can't help you.

You can use a traditional RSS Feedreader with this fancy-dancy link. I think this approach is harder but if you want to do it the hard way, who am I to say otherwise?

You can use a traditional RSS Feedreader with this fancy-dancy link. I think this approach is harder but if you want to do it the hard way, who am I to say otherwise?

People Never Buy On Price

posted this on Friday, July 19, 2013 at about 7am.
Give Me All Your Hunnerds

When I was a sales manager, I would often have sales reps that lost a deal comment that the reason they lost was because we were just too expensive. It took me some time to help them learn that I would never accept that as an answer.

It's a lazy salesperson that says his or her client made a decision based solely on price.

The fact is nobody buys on price alone. Nobody. Period.

I know, you might ask, "What about the people who buy from Costco?" Or, you may ask, "What about all the people buying double-wide?" or "What about those that choose to buy a Scion instead of a Honda?"

The interesting thing about a warehouse store like Costco is that not everything there is the least expensive place you can find it. Sometimes you just spend more because you buy bigger boxes. There is a perceived value there that people love. Many products do have a better price. Many products have a better quality. Sometimes, the experience of a big warehouse causes people to feel that they are actually saving something.

People make decisions based on a number of factors. For everyone, the reason they choose to buy something or not buy something is because of very individual things. The relationship they have with the sales person is often the biggest reason someone buys something. That relationship also extends to the store. If they feel a connection to the store, they will buy. If they don't, they won't.

As an example, I will never buy anything from Shopko. I don't care how inexpensive it is compared to the competitor, you'll never find me go in that store. You won't even catch me buying from them online. I just don't like it. I had a few bad experiences (including a month working for them years ago) that prevent me from interacting with their brand.

You might choose a double-wide because you don't think you can afford a house or you might think that's the lifestyle you want. You might buy a Scion because you think it looks cool and figure you'll probably sell it before it starts to fall apart.

What this really boils down to is the value that the customer sees in a product or service. The customer may say, "For what I am getting, I am only willing to pay a certain amount." Once the customer determines that the value of the product meets his or her minimum threshold of what he or she wants, only then does the price becomes a factor.

All things being equal, people will choose the lowest cost. If the format for purchasing and the specific product is the same, nothing is ever equal. For example if you have equal trust level in two online stores (e.g. you've had the same purchasing experiences from both) and the products are identical then you'll choose the lowest price. Even buying from eBay, people make these types of decisions by how much they trust the seller of the product. If they don't trust the seller for whatever reason, the value of the product goes down.

Usually, however you'll find that even your experience at the stores will be different. Even when similar, the experiences are different. A good sales person's or a good marketer's job is to help their customers understand their unique value.

For me, as a consultant, my job is to prove why it is that I am going to be more expensive. I am going to be more expensive for a reason. If you are willing to pay for that experience, I am the right person for you to buy from. If you are not willing to pay for that experience, then feel free to go and buy elsewhere. The experience that your customers are looking for has to match what they want... not what you want.

Bottom line. No one ever buys based on price... even if that is what he or she says. There is always something more to it. Period.

Corey Smith and his wife are the proud parents of five wonderful children and live in Meridian, Idaho. He is the president of Tribute Media, a Meridian based Web Design & Marketing Agency.

He is the author of two books, "Do It Right: A CEO's Guide to Web Strategy" and "Tweet It Right: A CEO's Guide to Twitter." You can learn more about his books here.

Interested in having Corey speak for your organization? Need help building or marketing your organization? Want to tell Corey how cool you think he is?

People don't buy on price alone

posted this on Friday, April 12, 2013 at about 5pm.
cheap gas

When I was a sales manager in a former career, I’d have sales reps that would tell me they lost a deal based on price alone. I would always try to help them understand that was only the excuse they were using to make themselves feel better.

While I agree that there are many people that say they make a purchase decision based on price, the reality is that most people have many other considerations, which they usually never think about.

I think people who truly believe they buy on price alone just aren’t very smart. When they disregard all other considerations, they often will spend more money. Maybe that is the biggest proof they are not actually buying on price.

I live 9 miles from Costco. Costco has an average savings (as far as I can tell) of about $.05 per gallon… sounds pretty good, right? I get 20 miles to the gallon. I have a 20-gallon gas tank. This means that driving all the way across town saves me $1… and only if I am bone dry by the time I get there.

But wait, it takes me almost 1 gallon to drive there and back and gas costs $3.50 per gallon. That means that cheap gas just cost me $2.50 more to buy from Costco.

Let’s get a little crazy. Let’s say that going to Costco saves me $.50 per gallon (not likely, but let’s say it anyway). My 20-gallon tank saves me $10, but it still costs me $3.50 to get there and back. I reality, I have actually only saved $6.50. It takes me an hour to get there, wait in line and get back.

If $6.50 is that important, I could have worked one hour at McDonald’s and been better off.

If I’m already there, it may be worth it, if I don’t have to wait too long at the pump. If the philosophy were correct that people only buy on price, gas stations across the street would have the same price or no customers, all the time. I have seen gas stations across the street have a $.15 variance and still the more expensive gas station is busy. Why would that be if people only care about cheap gas? If people only care about cheap gas then why is premium gas even offered?

Your customers are no different. When they say they make their decision to buy from your competitor because you are too expensive, you need ask one of two questions:

  1. What price could I drop to in order for you to buy from me?
  2. What more can I offer to make the price more appealing?

You’ll find that they will still say no to you, which means that they are proving my point. If you can get to the bottom of why they are really saying no then you’ll be able to be more effective in your sales approach.

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