Price versus Cost

Price versus Cost

The term “price” is often incorrectly used for “cost” by both customers and prospects. In fact, price is only one factor in the total cost of a product, service or solution. For example, if the price of Software A is $100,000 and the price of Software B is $90,000, the price of Software B is less. However, if the implementation of Software A is $15,000 and the implementation of Software B is $35,000, the total cost of Software B is greater (i.e., $125,000 versus $115,000). If price is all that the customer or prospect hears from the seller, price (not cost) will be the deciding factor.

Consultative sellers know that buyers are either cost cutters or price cutters. To maximize revenue and profitability, consultative sellers focus on working with cost cutters, not price cutters. Consultative sellers also replace the word “price” with “investment.” Price takes money and has a negative connotation. Investment gives money and has a positive connotation. Educate customers and prospects on the total value received by investing in your solution. Value is the increase in revenue or decrease in costs in excess of the total investment. Remove “price” from your vocabulary.

All contents copyright © 2013, Josh Lowry. All rights reserved.

Advertisements

Leave Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: