When you talk about the price of your product or service, are you buying business or selling something that will add value?
Many businesses, especially small businesses, believe that they need to be ‘low cost’ in order to win business and be competitive against more established companies – this is not the case.
When you’re putting together a quote or proposal for a client, the focus should never be on the price. The mission is to get them thinking about the value of your product or service. The final amount you outline in your quotes will then reflect the value-added to the client.
Quoting your solution based on value, not price, will not only increase sales, but it will also boost your profits.
How to establish value
Establishing the value of your service comes from the work you put in before and during the meeting.
Understanding the problems a business faces (the pain), 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 the current conversion rate, average order value, profit and staff-hours required to fulfil an order. With this information, you can paint a picture of how an investment in your solution will increase future sales and productivity.
For example, imagine you’re selling some order processing software that will track customer orders and send automated progress updates both 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. More hours are now available to achieve other things – things that have probably been on the boss’ mind for ages.
With the right information, you could outline both cost savings and increased revenue in one go.
The competitive edge
It’s important to remember that value is based on the customer’s perception.
Without establishing value, it’s highly likely that your solution will be compared to a price they found on the internet or the last thing they bought – which could be a cup of coffee.
If you establish 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.
Questions you can ask to help establish value
Factfinding is essential to creating the value of your solution. The easiest way to gather information is during a face-to-face meeting. The questions you ask during that meeting can help reveal the companies ‘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 the average profit from each order?
- How many sales do you need each month to maintain operational?
- How is the company structured? How many departments, and how many employees in each?
- What are your growth plans?
These questions are just some examples to get you in the right frame of mind. It’s usually best if these questions are woven in-between the conversation rather than fired at the client as a questionnaire.
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.
How ETC can help
If you need help turning your conversations about price to one about value, please get in touch.
If you’re 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.
This is the fifth in our sales series. If you haven’t already, you can read the others here: