by Grace Pan
This book – co-authored by Lawrence L Steinmetz and William T Brooks – highlights the pricing strategies to increase profits and market share of an organization.
You can purchase it here.
It elucidates why lowering your price may be a bad idea, and points out the importance of looking at profit margins and creating value for your product.
It further explains the importance of determining your competitive advantage, and using it to differentiate your product such that it will not be seen as a mere commodity.
Emphasize Your Competitive Advantage
Such a competitive advantage can be achieved in the form of one or a combination of five fundamental things, as set out in the book:
Price is Never a Reason to Buy
Price however, is not the sole determinant of whether one decides to buy your product. The authors explain that based on research, price in fact is never the primary reason why a person buys anything.
The book stresses that you need to give customers a reason to buy what you sell other than price. For example, factors such as quality, service, sales capability and the ability to deliver the professional service to the customer when they need it, where they want it and on time. These factors play an important role in whether one decides to buy your product or engage your service or not. What buyers and customers really need is not always low price.
It is also pointed out in this book that price makes a huge statement about credibility. When your prices are too low, prospects may be doubtful about the quality of your product or service.
What Quality is all about
When it comes to quality, this does not refer to the best stuff made. It instead, refers to the correct stuff for your prospect’s requirements and needs. It is about meeting the specific set of customer standards and expectations.
When you find your competitive advantage, selling occurs. Selling, according to the author, occurs when you have the world buying your products and services even though your prices are higher than your competitors.
The book also warns against messing with “price-buyers”. Salespeople who are most successful do not mess with price buyers. They know when not to sell and to whom not to sell. It explains how these price buyers would drain you in terms of energy and profitability, leaving you with little time to spare for other customers. A premium price has to be charged in order to give your customers what they need and want.
What Buyers really Need
The book also helpfully sets out what buyers really need as follows:
(a) On time delivery
(c) Help and guidance on complex purchases
(d) Quality, timeliness, quantity – they need to get what they ordered
(e) Speed and accuracy in invoicing and accurate cost information
Read this Book when you are Thinking about Pricing
This is an interesting, helpful and useful book to read when you are thinking about pricing. It rightly and convincingly points out that price is neither the only nor primary consideration for buyers, and that quality, service, delivery are also key factors in deciding whether to buy a product or service.
Nonetheless, this does not mean that price is entirely unimportant. As also said in the book itself, price is one of the five fundamental things that affect your competitive advantage. The book also recognizes that it is true that a few people and businesses really do buy products and services based solely on price. These however, are not “ideal” customers according to the book, and it warns against messing with “price-buyers” as they drain your resources and may not be good paymasters as well.
Perhaps there should be a balance struck, as a seller should also not price its products / services at unreasonably high prices, unless it has a very unique selling proposition. Price should remain reasonable, e.g. agreed pricing between buyer and seller and tied to the agreed quality or service that the buyer wishes to have.
This article has been first published here https://www.linkedin.com/pulse/book-review-how-sell-margins-higher-than-your-competitors-grace-pan/