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Home » Business And Finance Articles » Sales 101 Learning About Price Vs Cost

Sales 101: Learning about Price vs. Cost

For as long as there have been documented records, there have been merchants, or as we are called in modern vernacular, salespeople. People want things. People need things. Considering that there will always be a public demand for something, there will always be a need for salespeople! It has been said that "Nothing happens until someone sells something." This is absolutely true. The sales function drives every other aspect of a modern company. Sales must come first, for without sales, there is no need for marketing, accounting, manufacturing, human resources, etc...

Ask almost any average salesperson what his greatest problem or objection is and more than likely you will hear the word price. "My prices are higher than my competitors" or "Our prices are too high" are often the mantra or excuse for lackluster sales figures. Ask a superior salesperson however, and I suspect that you will find, in reality, she has learned that price is seldom the real issue. Let's consider the acronym P.R.I.C.E. for a moment: Perceived-Reality-Investment-Cost-Expectation.

Perceived: Sales are most often a process involving perception, or perceived value. Our job as professional salespeople is to sell the value of our goods and services. Once the customer sees that the value of the product or service offers more to him than the selling price asked, the sale is made and the issue of pricing actually never became an issue at all.

Reality: Let's face it, so often sales people use the price excuse for the reason why a sale was not made. Assuming that you are dealing with a qualified prospect, and you are wasting your time if you are not, the reality is that your prospect needs to learn exactly how your product or service fills his need, closes the void and meets his requirements in a timely manner. That is plain reality.

Investment: The customer must be shown that by purchasing from you, she is making a wise investment and not simply incurring an additional expense. Buyers are not interested in driving their costs higher by spending more money. They are interested in solving their problems. They desire to make cost-effective decisions based upon perception and education.

Cost: As a professional salesperson, interested in meeting and exceeding the expectations of your prospects and customers, you must always be aware that price is simply not equal to cost. Remember the old axiom... "Beware the cost of the lowest price." Cost of ownership, payback time and solving problems are the true issues a professional buyer is really looking for.

Expectation: Today's customer assumes quality. They assume service and delivery. Your buyer expects that the products and services that you propose are actually presented with her best interests in mind and that they will meet her needs. That is the starting point. Do not be fooled when a buyer asks you about pricing. If they can maximize their value and get it at a lower price, they will attempt to get it, but they will buy at your set price point if expected value is there.

To simplify things further, remember that the customer actually makes the purchase decision only once. The money allocated to acquire your product or service is typically spent one time for each purchasing decision. For each purchase, the company must then deal with the reality of that decision. The item purchased is then placed into service within the structure of the buyers' company. After this point, various employees and internal departments such as engineering or maintenance must deal with that particular purchase decision. There will often be ramifications from each purchasing decision within other departments in the company. The true cost of each purchasing decision will show itself over time. Cost issues continue to present themselves over the useful life of the product or service purchased, long after the purchase was actually made.

Cost and price are two very different concerns indeed. Do not get caught in the trap of thinking otherwise. Superior salespeople have learned that hard lesson at some point earlier in their careers. Do what all superior salespeople do; shorten your learning curve by acting on this new information. Move your career into high gear by accelerating your learning of these superior principles.

Copyright 2005 Daniel Sitter

And here is another random article you might be interested in...

Dating Tool: Confidence 101

I'm over it. "There's plenty of fish in the sea," they say. Well, apparently I have been using the wrong bait. Nobody said dating would be easy, but Hollywood sure likes to paint it that way, doesn't it? "There's someone for everyone," they say. Maybe that ought to translate to, "There's someone for everyone....as long as you're a muscled pretty boy with washboard abs, and at least 6 feet tall."

So how does one get by this unsettling dating stipulation? Are we actually to believe that love will find us when we're not looking? I think people who say that are normally in happy relationships when they say it. Can we "buy" outer beauty from an online store to match our own inner beauty? Somebody is buying pheromones and weight-loss pills and liposuction and facial restructuring. Hell, now people even get plastic surgery to make them look like a celebrity. Huh??? And you know what? I bet these things work for people. As long as it can build the confidence up in someone, it also strengthens the attraction. So how can we build up that confidence without spending tons of money to people who know how the game works? Sounds like a question for the shrink.

I suppose its all part of why I started up a matchmaking service with a friend of mine in Los Angeles. It can be so frustrating out there. And being "alone" can only make your work day more stressful, it seems. So if I had someone to do the dirty work for me....get me the dating connections, counsel me on why I might not be getting that second date, maybe my frustration level would decrease. So I went into the business....pretty much as a means to find out what can be done to find the perfect one. OK, so nobody's perfect, but at least maybe I can find a decent one who happens to have similar ethics as myself. Oh, and a killer sense of humour is mandatory. But looking around, nobody was going to help me, a fact that made me feel even more alone! So I had to do it myself. Such is life, right? Part of it might be that I feel a need to always be in control of my own destiny. As long as I am actively pursuing something, I am a success. Yea, that sounds right! So I joined forced with my cohort and we started Let's Meet Here. Now I'm gonna' find the one, right?

Wrong!

As it seems unethical to date my own clients (damn, I knew I'd run into some roadblock!), I figured....at least pass on any information I can gather to those who need it (and baby, we all need it!). Granted, I am learning about all this stuff now. It seems every date and every relationship is completely unique. There is no list of do's and don'ts that applies. But I do know that going into the business has allowed me an increase in confidence that is apparent in me without my even having to think about it. I am starting to really believe that success comes from the active pursuit of a goal, whether or not the goal is achieved. The process in itself builds character...and character is attractive.

So while I learn as I go, I will show as I go too. It is absolutely within my own power to be a success. And the pursuit of achievements is an achievement of its own. However, I have also learned that a little is never enough. And to settle after one's success is no success at all. Maybe now I'm fishing with the right bait!

By Kerr Seth Lordygan
Director, Lets Meet Here, LLC
www.lets-meet-here.com