Value over Price (Price-Objection)

I have for many years been quite ignorant to the dynamics that determine when a prospect is willing to buy my product at a given price. All my mentors have all ways taught me the way to overcome the “price”-objection. The easy way is simply to yield to the pressure of the prospect and lower the price to a level that pleases him/her.
Although that is an effective strategy, it is still a costly way of doing business. You do not always have the opportunity nor do you always have the leverage to lower the price any further than might already have. If that is not proof enough to why this will never be the preferable way to go – there is another fact to take in consideration: If you start with your absolute lowest price, the costumer sometimes still object to it. Then what will you do?
I see pricing as a recital of two factors: Price and Value. They go so well in hand that you are perfectly capable of making a graph showing their affiliation. On the x-axis is the “Relative price” and on the y-axis is the “Subjective/Objective Relative Value”

It is quite simple: If the value exceeds the price – the client can afford to buy. If the price exceeds the value – the client cannot afford to buy. In other words: As a sales professional we do not only have one parameter in negotiating price. We have in fact two.


The graph above shows “Product A” priced at 50.000 $. It does not matter what the product is, because as the graph also tells us, the costumer only values the product to be worth 20.000 $. So if we would have to sell to this costumer we will have to lower the price by 30.000 $ to meet the costumer where the costumer would feel that the product is priced right according to its value.

But is the costumer right? The costumer is always right, right? Well first, we have to find out why the costumer does not value Product A to be worth more than 20.000 $. Maybe the costumer did not understand the need payoff potential in Product A. Maybe the costumer thinks he/she already have a product that solves the same problems for the price of 20.000 $. We simply will not know before we ask. But if we as sales professionals know for a fact that our product has so much potential, that the value is actually more or less around the millions, we should simply emphasize that value, right? Let us look at the same product with a different approach.
Again, the price is 50.000 $ but the costumer values it around 20.000 $. Instead of lowering the price, we decide to emphasize the real value that the costumer did not quite catch when we first pitched the product.
The costumer might see the light (or some of it at least) and shift the value a nudge up. This is plain theory – I know – but underlying the value of the product is what selling is all about. If we never do that the perceived value of the costumer would be zero $ – so this should not be total nonsense anyway. If we continue to do underline the value, we might end up with a costumer that would be more prone to buying at the right price (seller’s value). If the costumer is not willing to buy at the preferred 50.000 $ we might – with good effort – be able to nudge it up to 35.000-40.000 $ which is better than the first instinctive strategy to lower the price.

I hope my blog post has given value to you. In my next blog post, I will present the model I use to make sure to first building value before I lower the price.

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