The Big Idea:
Prices are only relevant for two reasons: whether someone can truly afford to buy, and whether they feel that the value they receive justifies the price. Salespeople often talk in terms of price, when I would argue that we should usually be focused squarely on value. If we are driving higher and higher values through our demos, price becomes the least of your obstacles.
Whenever I talk to salespeople, they are pretty focused on pricing. Maybe they were trained to focus on pricing. Perhaps delivering pricing is the most dreaded part of the sales presentation, so that’s where they focus. Maybe pricing is seen as an obstacle to be overcome. Perhaps it’s just that pricing is directly tied to the salesperson being able to provide for their family.
Regardless of the reason, it is pretty clear that the best salespeople, and the best sales managers, don’t focus on price at all. They focus on value, and here is why:
Cheap and expensive are all relative, right? $500 for a car is dirt cheap. $500 for a breath mint is insanely expensive. It’s the same amount of money, but what is different is the perceived value of each item. Perceived value drives perceptions about the reasonableness of any given price.
The Value of Diamonds
Let me give you a great example of how value drives price:
What is the value of a diamond? Diamonds are really expensive, right? When a man gets engaged and goes to buy the rock, he’s probably dropping thousands of dollars to get a good ring. But diamonds in and of themselves have very little inherent value. They are, as I heard them described recently, a relatively boring arrangement of carbon atoms, cut and polished to look pretty. In geological terms, they’re really not even all that rare. Diamonds are, in fact, among the most common of all the gems.
A quick example to show you just how crazy this is:
Tanzanite, with a gorgeous deep blue color like a sapphire, is said to be around 1,000 times rarer than diamonds, making it among the rarest of all of the gems. However, a carat of tanzanite runs $300 to $1,000 while a diamond can run between $2,000 and $9,000 per carat depending on quality. Tanzanite is a thousand times rarer, and yet is a small fraction of a diamond’s price.
So why do we drop months of pay to get a diamond?
Because “A diamond is forever.”
De Beers had a lot of diamonds that they couldn’t sell, so some brilliant branding folks made them the defining symbol of commitment in marriages… and now stores selling diamonds can be found in nearly every major mall in America. Then came the process of grading diamonds which only increased their cost. Poorly graded diamonds were able to be more “affordable,” and high-grade diamonds became powerful are symbols of wealth and privilege.
De Beers created value out of thin air and attached it to the thing they had piles of just sitting around. They created a perceived value by connecting a symbol to the otherwise unremarkable diamond and then captured that value again and again.
I’ll say it again: perceived value determines how much someone is willing to pay for something. It’s really almost that simple.
The Commodity Lie We Tell Ourselves
That is why I kind of want to smack anyone who says that a roofing shingle is a commodity, so therefore prices are too high. Guess what? So are diamonds! While they are a bit of a special case because of the De Beers family monopoly controlled supply for most of the last century, they are an undifferentiated raw good mined from the earth exactly the same as iron ore, oil, coal, and tanzanite.
Do you see a man telling his fiancee that she isn’t going to be getting a diamond because the prices are unreasonable for a commodity?
I don’t think so.
So stop using price as an excuse for not closing sales. If you do a good enough job building value in truthful and creative ways, your price will be a non-issue for the majority of your prospects.
Make every demo your best demo by focusing on your company story, aligning your service with the prospect’s values, surfacing and addressing their fears, and effectively communicating the benefits of your solution.
Remember, diamonds are mostly useless at the end of the day, and what you are selling is actually important to a family’s well-being.
Knowledge is power.
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