In this article, sales expert Christer B Jansson writes about how to think about pricing and when is it expensive or cheap for the customer?
In several seminars and lectures, I have seen the discussion about daring to take the right price, price that strengthens the brand, value-based pricing ie what it is worth to the customer, affordable or expensive, cheap versus high cost. In addition, should I deliver above the customer’s expectations so the customer gets a positive surprise?
Can a high cost be cheap and a low cost expensive? Yes, it can be so. It depends on what the product/service will do for me and what I get back on my investment, i.e. the money I pay for it. If the service/product that cost more pays for itself in one year and then delivers the same profit for four years while the cheaper one never delivered profit, it can be considered expensive and the service/product with lower cost is expensive.
I have always sold goods/services that cost more than the competition and most companies have understood that what I represent is the cheapest.
Many years ago I visited a construction site to sell a pair of shears for cutting rebar. At the same time, a salesman from one of the leading power tool companies came and was going to sell drills. On the construction site, we found a competitor of his who also sold drills that could drill holes in concrete for half the price. The construction workers’ comments to the first seller were – Why is your machine twice as expensive when the competitor does the same job? In other words, the competitor is cheap and you are expensive.
He countered with “For the average consumer, the machine I sell is probably expensive as the consumer does not need such a machine I sell, but for you on the construction site, I am actually cheaper than the competitor’s”; whereupon he sent his machine across the floor so it slammed into the concrete wall. He then went and picked up the machine which was undamaged and was fine to continue drilling with. Then he said “The competitor can’t do that with his machine and you never lose a machine on this construction site, do you guys?”
He knew his target audience, his machine and in this environment, in other words, he was the cheaper option, while for home use his machine would have been expensive.
