When you quote the price of your product or service, are you selling a thing, or are you selling something that will add value?
Many businesses, particularly small businesses, believe they need to be ‘low cost’ to win business and to be competitive against more established companies – this is not the case. If you understand the client’s pain points, you should be able to quote a solution that solves a problem and adds value to their business.
Quoting your solution based on value, not price, will increase your sales conversions, and as a result, you’ll be able to increase your prices and boost your profits.
How to establish value
Establishing the value of your service comes from the work you put in before and during a meeting with your prospective customer. Learning how to prepare for a meeting and asking the right questions in a meeting will give you everything you need to understand the problems their business faces (the pain). This information will allow you to outline how your solution can add value.
For example, imagine you are a roofer quoting to repair a leak at a factory. The owner describes how he’s had to stop or remove machinery because of the leak. Your solution (fixing the roof) is worth the lost revenue from the inactive machinery over time, not the cost of the repair.
Sometimes, the ‘pain’ isn’t so apparent to the client, and you’ll need to work a little harder to establish value. The key here is to understand things like:
- Current conversion rate
- Average order value
- Time taken to fulfil an order (including aftersales)
This information can help paint a picture of how an investment in your solution will increase future sales and productivity.
For example, imagine you’re selling order processing software to track customer orders and send automated progress updates internally and to the customer. The value here is the reduction in time someone needs to spend updating people on the status of an order. As a result of your solution, more hours are available to achieve other things. Perhaps you’ve saved an additional salary, which would have probably cost the business much more than your solution.
With the right information, you may be able to outline both cost savings and increased revenue in one go.
How to quote based on value, not price
Factfinding is essential in creating a value-based quotation. The questions you ask your prospective customer can help reveal the company’s pain’ points – which can sometimes be unknown to them.
Here are some example questions you can ask in your meeting:
- What is your current conversion rate?
- What is your average order value?
- What is the average profit from each order?
- How many sales do you need each month to maintain operations?
- How is the company structured? How many departments, and how many employees are in each?
- What are your growth plans?
For more information on how to conduct an appointment that gives you the best chance of closing a sale, read our conducting a sales appointment article.
The competitive edge
It’s important to remember that value is based on the customer’s perception. Without establishing value, your solution will likely be compared to a price they found online or the last thing they bought – which could be a cup of coffee.
By establishing value based on a genuine understanding of how your solution will meet their requirements, you will have a competitive edge regardless of whether your price is higher or lower than an alternative.
How ETC can help
If you need help increasing your sales quote conversations, please get in touch.
If you are new to ETC, why not contact us for a free new business review? We’ll spend two hours with you, giving you professional coaching and will leave you with actions for immediate implementation.