Does Volume Make Up
for Low Price?
By Mark Hunter
The phone rings and
the sales manager hears on the other end the all-too-familiar plea
of a salesperson. The salesperson tries to convince the sales
manager that it makes so much sense to offer the prospect a discount
to get them to finally become a customer. Of course, the salesperson
has the expectation that this new customer will quickly become a
high-profit customer. The sales manager has heard the same plea
hundreds of times before, and yet for some reason, the salesperson
and the lack of current sales suddenly make offering a discount very
It’s as if we’re
watching the unveiling of a very slow accident that is completely
avoidable and yet happens anyway. The salesperson gets it into his
or her head that the only way to close the deal is by discounting
the price. They just need to convince their sales manager to go
along with it. When this occurs, a major shift happens with how the
salesperson does their job. No longer are they selling to the
customer; now they’re selling to the sales manager. The problem
with this is simple – a salesperson gets paid for selling to
customers. That’s how both the top-line and the bottom-line are
If you’re reading
this and you’re a salesperson, here is some very simple advice.
Contrary to what you believe will happen, you will never make up in
long-term profit what you’re about to give up with your immediate
discount. Sure, there are always exceptions to this, but such
exceptions are similar to me winning the lottery. Is it doable?
Yes. Is it probable? NO!
When you discount
the price, the new price is now the price of value the customer is
willing to pay. When they’re offered the price once, they will
expect it again and again. When you attempt to move the price to the
“normal or regular” price, they see it as a price increase. Even if
you do get the price up to the “normal or regular” price, you’re
still behind the profit curve because of all the product you sold to
the customer at the lower “discounted” price.
I hear this
argument a lot: “You don’t understand. If I didn’t offer the
discount, I would never have had the opportunity to move the price
up, because they would never have become a customer.”
My response is
always the same: “So what! It doesn’t matter.” In your quest to get
the customer, you cut your price. But you did so much more than
that. What you did was cut your profit dollar for dollar. That is a
very simple fact of what happens when you cut your price. It’s
highly unlikely you cut the cost of your goods or services, because
your goal is to get the customer to experience what you can do. That
means the only place to cut is your profit.
Here’s the deal:
Your ability as a salesperson is not in how much you sell, but in
how much you earn for your company. It’s the bottom-line profit that
counts, and anytime you reduce your price, you’re slashing your
There is not a
sales manager out there of any quality who will allow any
salesperson to spend their valuable time trying to sell internally.
The focus must be on external selling. Focus first on creating
value by determining the needs of the customer. Then position your
product or service as the solution, and do so at full price.
This is the only
strategy that ensures you are not only protecting profit, but also
ultimately in a place to increase it!
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