The Price Is Right?
Many entrepreneurs are consumed with putting price tags on their products or services. But at what cost to their businesses?
Whenever a prospective client asks Curt Nelson for the cost of
his product, he always replies with the same answer: "I'm
not sure." Exactly why does he do this? Nelson says he
honestly doesn't know the cost until he talks to the customer,
and, equally important, he doesn't want to get into a price
war.
"Price isn't [the only thing] that drives a customer,
even though everyone thinks it is," contends Nelson, 47,
president of Crystal Group Inc., a Hiawatha, Iowa, computer
manufacturer. "The real issue is always value. Think of it
this way: Would you eat the cheapest hamburger simply because it
cost next to nothing, regardless of how it tastes?"
Despite this argument, many entrepreneurs and their salespeople
continue to focus on price alone. In some industries, price tags
drive deals because customers often use them as their primary
measuring stick. Unfortunately, salespeople go along with these
customers all too often. That doesn't mean you have to succumb
to a price war, however. In fact, the most successful entrepreneurs
rarely do.
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To avoid focusing entirely on price, a company has to come up
with ways to differentiate itself from its competitors. The best
way to do this is to make sure your salespeople ask prospective
buyers a lot of questions--and actually listen to the answers.
Bill Kelley is an Arcadia, California, business writer and
former editor of Sales and Marketing Management
magazine.
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