People Buy Value NOT Price- Strategic Value Management, Pricing and Product

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How do you sell your product or service? 

Do you set the lowest pricing strategy or give your product value in the market? 

In this article, let us discuss how strategic value management can help you sell faster and smarter. 

Many sales professionals who do not understand the concept of selling value, never be able to sell their product or service to the right customer, and why is that?

Setting low prices to compete in the market is not a long-term growth strategy for any business, eventually, your customer might feel that the lower the price the lower the quality.

Instead of focusing on the product value or service pricing, shift your focus to promoting the value of the product to your customers.

selling a vehicle - i4T Global

When a customer asks you ‘’ How much does your service or product Value/cost’’ what they are really asking you is: 

‘’ Are you going to charge me less than the value it has for me?’’ 

This is an important concept to understand as it will change how you set your prices.

Let me start with a value-pricing example.

Do you own a Car?

What is a car and what is the purpose of investing in it? 

Simply put, it is a vehicle- a mode of transport that will allow you to commute from one location to another. 

Let us dive deeper into our example to give you a clear picture: Let’s say you are in the Trade business, then you probably need a vehicle to get you to places and carry your tools for you. 

You will probably choose to drive a Ute, but the question is what type of Ute will you choose? 

If you are a trade business you probably drive a Ute, but what type of Ute?

A Great Wall Motor Company Ute costs around $35,000.

A Ford Ranger Wildtrack or a Toyota Hilux SR5 (Being in the Trade business for quite some time this is what I drive) cost upwards of $70,000.

Vehicle types and Product Value - i4T Global

Most of you have already decided which you would prefer. In front of you, there are two choices, one with a lower price and the other a higher one. 

But, they all do the same thing, they move you and your tools from one location to another. So based on the price we should all choose the Great Wall Ute, right?

As customers never make a choice solely based on the pricing, instead we all buy on what the value is.

For many of us, the perceived value in the Great Wall is not there, but it is with the HiLux and the Wild Track which are the biggest selling Utes in Australia, why, because we perceive that the value they provide us is more than the price tag – even though they cost twice as much.

The point is that you too can sell a similar product for twice as much as your competitor if the customer perceives the price is less than the value they put on your product or service.

Do you Sell on Price or Product Value?

How many of us sell our service or product by telling our customers the value rather than the price? 

When you are selling to a prospect do you set a price and sell to that price, or do you explain the value to them and then sell at a price that is marginally below that value.

How do you do that?

Creating an impression on your customers when you are selling is important. As I mentioned in my previous articles about how creating a great impression can affect customers’ perspectives, you should apply a product value marketing strategy to sell.  

How can you sell a product or service to a customer by highlighting the product value? We do that by selling the benefits to a prospective customer, not the features.

Here are the features that focus on what your product or service does: For example, if you are selling the ute: 

  • It moves you and your tools from point A to point B. 
  • It has heated seats. 
  • It has a 5-year warranty. 
  • It has a 1-tonne carrying capacity. 
  • It can tow 3.5 tonnes.

Now, let’s focus on the benefits of the product, and what the features can do for the prospect: 

  • It moves you in comfort. 
  • You will arrive at the site warm in winter and cool in summer. 
  • It will always get to the job on time because it’s reliable. 
  • It can carry all your tools so you don’t need to tow a trailer.  
  • It can take you where you want to go, from towing a trailer at work to a caravan on the weekend.

What you tell your customers is what they listen to when making a decision. As a sales professional you need to think about what you are telling a client, are you telling them the features or are you selling the benefits of purchasing your product or service to them?  

Ultimately, it is up to market your product or service by giving it value, and not just a pricing strategy

By Alan Short | Founder and Lead Coach | Global Business Coaching

Business Coach for i4T Business

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