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EYE ON THE INDUSTRY

HOW TO HANDLE PRICE BUYERS
Exploding the myth, "But we have to justify our prices to our customers!"
by Lawrence L. Steinmetz

One of the oldest tricks in the books is for a customer to demand that sellers justify their prices. Nothing is more absurd. Let's consider this logically.

The basic problem with trying to justify your prices is that the customer does not want you to make any more money when your costs go up. For example, if your costs go up $2, the customer thinks you should raise your prices $2. But such a behavioral pattern would erode your gross profit margin and destroy your business

A simple example shows why. Let's say you offer a power tool for $99 and your costs are $66, leaving you a gross margin of $33 (see Figure at right). It is from your gross margin that any operating profit is available after paying wages, salaries, commissions and other operating expenses.

If the price of your product goes up $2 (from $66 to $68), and you raise your selling price by $2 (from $99 to $101), you would still have the same gross margin dollars ($33), but you would have a lower gross margin percentage (32.7 percent).

Raising prices only by your cost increase lowers your operating margins. Since profitability can only come from the margin (or spread) between what it cost you to buy the power tool and what you sell it for, you begin to experience profit loss on each sale.

The really disgusting aspect of justifying your price is that it is painfully clear that your customer knows why you raise prices or charge high prices: to make money. Your customer will argue that it is not "fair" for you to make money on them. So who is it fair to make money on?

The only definition I've found of a truly "fair price" is when both the buyer and the seller are unhappy with the price. What appears fair to one person is not fair to the guy on the other side of the order desk.

When a customer asks (or demands) that you justify your price, the best response is to ask why they think you charge the price you charge. Their answer likely will be, "Because you want to make too much money." Then ask them what is an adequate amount of money to provide them with the goods and services they've come to expect from your company.

Anyone who has ever attended a purchasing training seminar knows they teach, 1) Always challenge the seller's price, 2) Always tell the seller their price is too high, 3) Always tell the seller you can get it cheaper down the street, and 4) If you don't ask for a discount, you won't get it.

They also teach buyers to prey on the seller's insecurities. The seller doesn't know whether the customer can get it down the street for less money, whether the competitor down the street has it in stock, can deliver it, on time, as promised, and whether the competitor provides the same general level of services, technical help, support, inventory, order turn-around time, etc., at the same price. It's easy for customers to say your competitor does all these things; it's something else for that to be true.

If customers beat you up for lower prices, you are probably inviting and encouraging those actions. How do salespeople invite customers to hammer them for price cuts or discounts? Usually, it is either through "wowing" or "cracking."

NEW BOOK FROM THE AUTHOR:

HOW TO SELL AT HIGHER PRICES THAN YOUR COMPETITORS
The Complete Book on How to Make Prices Stick by Lawrence L. Steinmetz

Crush Price Objections Into Oblivion!

Finally! The answer to the one problem that gives salespeople sleepless nights: How to sell against a price-cutting competitor.

Anyone can give products or services away by cutting the competition's price. Selling occurs when your prices are higher, but you are still able to close the deal. If you want to give stuff away, get a job at the Welfare Department. If you want to learn how to sell at a high price, read this book. It is about making money by selling.

In this powerful book Larry Steinmetz reveals cunning insight on the following issues:
How to face a competitor's price cuts
Things buyers would like besides a low price
How to identify under-pricing and over-pricing
The secret to determining your competitive edge
Why successful business is a game of margins, not volume
The truth about customers who purchase solely based on price
And much more...

Here's what other sales professionals have to say about this remarkable book:
"If you are only going to buy one book this year, this is it. Larry Steinmetz knows more about helping a business owner grow and flourish in changing times more than any author I know. How to Sell at Prices Higher Than Your Competitors is a must for anyone committed to their own financial success."
Patricia Fripp, CSP, CPAE

"A fantastic book! I picked it up to skim through it and I found myself reading it cover to cover. It's a must read for anyone in sales and marketing."
Tony Alessandra, Ph.d, CSP, CPAE

"The competitor with a lower price has always been the bugaboo of sales people. This book has one clear focus, price. It thoroughly covers the subject, showing when a competitor has a lower price, how to avoid making mistakes and how to price so your company will be more profitable."
Somers White, CMC, CPAE

"Larry Steinmetz has hit a home run with ‘How to Sell at Higher Prices Than Your Competitors - The Complete Book on How to Make Prices Stick’. This book addresses the most common, nagging, persistent and consistent problem faced by virtually every salesperson in the world... "Your price is too high," and it addresses it in a way that will empower the reader to deal with it in a tangible, powerful ways."
Bill Brooks, CSP, CPAE

"Finally! You have in your hands the answer to the one problem that gives salespeople sleepless nights: How to sell against a price-cutting competitor!"
Roger Daeson, CSP

"As I look over my personal library of several hundred books... I see motivational titles, self-help "how to" books... What I do NOT see is many books I have read more than once. The book before you is one of those rare exceptions. It may take a dozen readings for me to fully learn all the lessons in this volume. And I'll continue to enjoy every reading moment."
Jim Cathcart, CSP, CPAE

"Larry Steinmetz writes the same way he talks. Straightforward, plain and simple logic, based on through research. His "down-home" demeanor, coupled with his ability to "spin a yarn" or use of analogy, drive his points home throughout this book. If you're a salesperson or a company that depends on sales... you better read and heed this book... your competitors will." "
Jerry Hansen, CSP

‘How to Sell at Higher Prices Than Your Competitors’ should be on the reading list of anyone who ever considers a career in business and a must for those in sales and marketing. This is not a book of theoretical hogwash, but easy, understandable reading for business basics."
Marilyn VanDerber, CPAE

"The biggest single objection to purchasing any product or service in a competitive market is price! This book will show you how to make sales at a rate that you never believed possible be enabling you to deal, once and for all, with the subject of price, and put it out of the way of the buying decision. Every salesperson and company can benefit tremendously by building these ideas into their sales strategies."
Brian Tracy, Brian Tracy Learning Systems

This book is an easy and exciting read piled with sales wisdom that you can't afford to pass up. Start selling at higher margins and increase your profitability using Steinmetz's expert insight.

To order the book, call 1-800-331-1287

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