Does Leading with Price Hurt or Help Your Business? Blog Feature

Office

Stefan Christensen

By: Stefan Christensen on September 17th, 2020


Does Leading with Price Hurt or Help Your Business?

Do you automatically lead with price when you sell? What happens when you bring a product or service to market at the lowest price? Does this hurt or help your bottom line? At the most basic level, business owners may be tempted to look at what competitors are charging, and then price their solutions on the lower end of that spectrum. It’s understandable to want to be competitive and price in a way that does not create a budgetary obstacle for potential customers, but what other implications exist?

Business owners who take the above approach will argue that consumers really only care about price when they are making buying decisions. However, as someone who began their career in sales as a car sales person, I’ve seen examples of the contrary. The automotive market is highly competitive. In fact, manufacturers constantly have price incentives that help dealers virtually give vehicles away. Yet Tesla has managed to be the number one selling car in California with prices ranging from $35K to a hefty $100K. Compare that to most other manufacturers with inventory priced between $18K – $50K. Cars don’t have to be commodities, and neither do the products and solutions you sell.

In fact, according to a report by First Insight, quality is becoming more important than price to many consumers - 53% of buyers rate quality as the most important factor when making purchases compared to 38% who rate price first. The key demonstrating why the quality you deliver is worth the price you charge. With that in mind, let’s challenge the lowest price strategy and explore some of the negative implications of pricing too low as it relates to your customers, your business, and your psyche.

Your Customers:

Every day, I learn a lot from my dealers and the business insights they share. One, in particular, recently shared that they have actually lost deals when their solutions were priced lowest.

When you think about how you behave as a buyer, This shouldn’t come as a surprise. We’ve all either experienced firsthand, or heard stories, of bargain basement nightmares. You know the scenario when you buy a product or service for cheap, and realize instead of a really good deal, you got what you paid for. Maybe it’s that car that was for sale at half the market value, but you later found out it had a salvage title, or maybe it was that terrible haircut you got at the discount hair salon at the local strip mall. The point is, many of us have learned that lesson the hard way. Not only is this a losing proposition for your customer, but for you as well. People simply may not trust the lowest cost provider to deliver on the promise.

Your Business:

If you win business based on price alone, you’ll lose business based on price alone. Offering the lowest price means you’ll be expected to always deliver the lowest price, so when your competitors come down, you will have to respond in kind. This makes it a “race to the bottom” and a completely un-sustainable strategy. When your strategy is to constantly undercut your own price, there will come a point where it is simply not sustainable to go any cheaper.

It costs more money to service machines over time. Your employees expect raises based on experience and tenure. Expenses of owning and running a business will continue to rise. If you are to stay lucrative as a business, you simply cannot count on this approach in the long term because you’ll always risk losing your customers to the cheaper option. Don’t get into a pricing auction with your competitors. Instead, use your energy to figure out how you can offer your customers more value than anyone else.

Your Psyche:

If you do not see any value in what you offer above your competitors, neither will your customers. If we believe that what we sell is a commodity, we have already made the decision for the customer. When we allow the lowest price mentality to take over, we forget the value we bring. Yes, customers will buy elsewhere for $5/month less, but that can only happen if you are unable to articulate the value that extra $5 brings to them. Customers buy when value exceeds the price.

How to Articulate Your Value

Once you decide you don’t want to end up in a price race to the bottom, you’ve got to start shifting the conversation from cost to value. Start by getting together with leadership from all areas of your organization and define and agree upon on the biggest objections you face when it comes to how you have priced the solutions you offer. From there, you can create content and talk tracks that actually communicate your value proposition. As a team, you can create clear, consistent messaging that educates your prospects around why you’ve priced your products and services the way you have, what factors cause the price to go up or down, who your products or solutions are a good fit for, and how they compare to other options that either you or the marketplace offer.

Ask yourself what you are offering that others are not, articulate that value, and price accordingly. The simple act of being confident, honest, and proactive about why you charge the way you do will change the way your customers and prospects feel about your products, services, and overall brand, creating confidence that you’ll be able to deliver on your promises. Provide value which is unmatched by your competitors instead of succumbing to the pressure to match their prices. You’ll be surprised at how much easier it is to earn business and keep your customers happy when you are realistic about the price and are clear and confident about the value you bring.


Once you’re clear on the value you bring, it’s time to change the conversations you have with your customer. Your sales team needs to move from transactional conversations to a consultative, needs-based conversation with the customer to differentiate from your competition. Not everyone on your sales team will have the foundational sales skills to make this happen. Provide sales training to help them successfully make this transition and provide greater value to your customers.

Learn About Sales Training from PathShare:

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Stefan Christensen

As a Vendor Relationship Manager at GreatAmerica for the past 3 years, Stefan works with some of the fastest growing Office Equipment Dealers across the US. In his role, he develops custom sales and finance solutions to help dealers protect their customer base, increase cash flows, and also lower their administrative burden.

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