WHEN THEY LOWER PRICES, RAISE YOURS!

“OMG!! That’s the eighth time we have had to do that this week!”

“Do what?” said I with confusion in my voice. “Match the price on a leaf blower that my competitor has on sale.” I will never understand why some make pricing the ultimate king in business. All pricing does is enable you to win the race to the bottom. A race no one should be anxious to win.

Businesses have to come to their collective senses. Those who have followed my blog for a while know that it is NEVER about the pricing. It is the value consumers seek. Do you win ALL of the business when pricing rears its ugly head? No, but you can win the majority of them by using creativity and by adding value to your product.

Let’s examine the case of the leaf blower above. It’s a Wg546 Worx 20V cordless leaf blower which has a regular price of $99.99 but is on sale at the competitors for $74.99. In essence, we are talking about a 25% discount.

So far it seems we are talking apples to apples and there is no choice but to match the pricing. However, we need to ask: “Why is one store having a sale?” It could be they are overstocked, or they need an injection of cash quickly and are willing to take a hit to gross margin, never a good idea. Maybe they want to attract customers to buy other items and are using the blowers as a loss leader. There could be a multitude of reasons.

However, is there something the first company can do to differentiate themselves from the other store?

Knowing the two companies, the first one has a repair center whereas the discounted one does not. I did ask if they ever fixed items from the other company and got a yes for a reply. I also found out that they were Worx’s main dealer and had a great relationship with them. I then asked them a presumptive question: “When you called Worx and asked them to give you because you are their number one dealer, an extra year of warranty on the machines you bought, what did they say?” Yes, I knew they had not made the call. This is why they are called presumptive questions and one of the most effective questioning techniques to master. I then suggested they may want to make the call for the warranty.

The one thing we must all keep in mind is: “The answer is always NO unless we ask it.”

When I went back to pick up my lawnmower, which is why I was there in the first place the week before, I was informed the call had been made and yes, they got a second-year warranty added if they would purchase X number of units which they were very happy to do so. I then asked them: “What are you selling the blowers for now and how many times have you been asked to match prices?” The blowers were still $99.99 and there were three requests but two bought when they stated that there was an extra year on the warranty. I shook my head and once more when back to my favorite question: “Why?”

Let’s take a look at the big picture; you have your own repair center, a definite value, the reason I bought my lawnmower from them was because of this point. Yes, I could have paid less, but the fact the other business did not have a repair center I decided to pay more for the convenience. They have an extra years’ warranty. Value proposition two. They can offer a front of the line service for repairs which would make repairs quicker for the consumer. Value proposition three. Helping a small independent local company instead of a large National conglomerate. For a vast majority, value proposition number four. I suggested a retail price of $124.99. They reluctantly agreed.

A week later I got a call from them stating that the charge for my repair was being reversed on my credit card. They had sold more blowers at the higher price in one week than the previous two.

What we obtain too cheap, we asses too lightly.

Written by Joe da Silva

Joe da Silva is a Business Adviser/Trainer/Coach to multi-million dollar companies in Canada as well as internationally. He has uncovered the many secrets to Sales and Business Success over his 40 years in the field. He shares his experience and knowledge with fellow professionals to significantly increase their proficiency, productivity, and profitability through group and individual training, seminars and ongoing sessions such as The Action Suite. Joe's passion and goals are to mentor individuals with their professional challenges by shortening the learning curve and showing them how to grow into their own success. (JoedaSilva.ca)

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