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Guest post : sales & communication expert  Don Saracen                      

  APPLES & ORANGES
WHEN PRICING IS CHALLENGED

“Too many people today know the price of everything and the value of nothing.” ~ Ann Landers

Two million dollars’ worth of business was on the table; one major slip-up and our closest competitor was ready, willing, and able to snatch up the business. The meeting began cordially, with introductions and pleasantries all around, and then we soon got down to business. As we sat around the large oak conference table, you could feel the tension in the room. Three of us and six of our customer’s key buying team were in attendance. We were ready to present our annual report, including pie charts, product mix, and pricing, when the door of the conference room opened a crack. A secretary summoned the president from the room.

The VP of purchasing continued the meeting by airing his views before we could make our presentation. We listened intently to hear exactly what was on his mind. He talked about how we had had a long and meaningful relationship over the years, good service, and open communication. But what he was leading up to was our pricing. He said all things being equal, our competitor’s pricing was significantly lower while we, on the other hand, had recently asked for a small price increase. How could that be?

Well, fortunately for us, we had done our homework. I suggested that we turn to the financial section of our presentation handout where we covered pricing. We discussed how we had also been confused by the fact that our competitor could sell a product we both produce at a significantly lower price. We went on to describe how we had reviewed our raw materials, production, and distribution processes and found we were in line with the industry’s norms or better. We explained that we had purchased several of their products and run in-house and independent testing. Well the truth will set you free! Both the independent testing and our in-house testing came to the same conclusion—that our competitor was using inferior materials and less of them in the production of the same looking product.

There was a pregnant pause, and then the VP turned to his second-in-command and said, “I want those people in my office tomorrow morning at eight.” He turned to us and said, “We’ll review the rest of the report later. Keep up the good work. This meeting is over.”

Are the products or services you sell the same or different than your competitor’s? In most cases there are differences and it’s your job to be prepared and understand your value proposition. The moral of the story is: when someone is challenging your pricing, make sure you and your customer understand the difference between apples and oranges.

Don Saracen, is a sales & communication expert who has a passion to work with organizations who want to improve how they engage & influence in the new economy. He is president of Saracen Sales & Communications, author, and past president of the New England chapter of the National Speakers Association. Web:  http://www.donsaracen.com/

Book: http://www.amazon.com/dp/0615811523