How to sell at a higher or premium price?
Price pressure
Selling at a higher price has many advantages.
The question is how to achieve a higher price and not getting squeezed in a price war between your competitors?
Analyze what the lead really wants
As a start you need to know what the probable buyer wants. What are his purposes for the solution and the drivers for the purchase?
This requires a in depth review of the signals he is giving you:
- His behavior on the website
- The search terms used
- The originating website
- The company itself
- The branding of the company
- A leading or lagging behind company
- The question asked in the inquiry email
- The wording in the reply emails
- The comments he makes during the telephone calls
- The vision he has for the solution
- The method of working he has in mind for using the solution
- The body language during the meeting
- Their competitors
- The solutions bought by their competitors
The goal is to try to define the mindset of the probable purchaser.
Differentiate your offering
Next you need to differentiate your offering from the others. Anything that differentiates your solution from the competitors is good enough.
Insist on those aspects, features, functions or benefits that are sensitive for the prospect.
Only if the products or solutions from your competitors are 100% compatible and similar, then differentiation will be difficult and hard to explain the premium. Then it comes to the good name, fame, reliability and sustainability of the company or brand.
Potential customers are willing to buy at higher prices or pay a surplus for additional features, advantages and benefits that can be both: tangible and intangible.
Make them feel as if they are to obtain a unique benefit or advantage that will set apart their selected solution.
Of course:
- Make believe to have a bargain value although it is at a premium price.
- Uniqueness of the solution
- Potential higher sales, revenue, gross margin, profit,…because it is at a premium price.
Free
Give something for free that has low value or cost for you, but is valuable to the probable customer.
Still the complete price is higher than of your competitors.
People just love to get something for free.
This works both in B2C as in B2B.
Career play
People have build careers because of buying more expensive (and complex) solutions.
Examples:
- Mainframes during the eighties
- ERP systems in the nineties.
In many cases by spending more money, one makes himself more important in the company, because of being the buying manager he is in charge of the expensive solution, approved by upper management.
And the high investment is allowed to cost even more in order to succeed.
This career insinuation has to be mentioned carefully.
Price isn’t the main driver
In B2C consumers take risks, whereas businesses seek:
- Reliability
- Service
- On-time delivery.
The price isn’t the main driver, quality and avoiding risks are more important.
A high price justifies the decision, just to avoid those risks and having high quality as the product or solution will be better because of the high price. This is a vicious circle.
The alternative: just say “No”
There is one more solution:
When the buyer wants a price cut or a big discount, just say “No” and leave him to the competitors.
That won’t do the competitors any good.
Selling at a 10% price cut results in at least 35% less profit, or at least the double amount of units needs to be sold to make up for the discount.
Thus instead of selling, you avoid decreasing the profitability of the company or business unit.
The next time a potential customer asks for a discount, will you think twice before committing?
Or do you need the sale so much?
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