THE HIGH COST OF LOWERING YOUR PRICE

The customer says that your price is too high, you think for a second and tell the customer you will let them have it for a 20% discount. The customer does the math in their head and says that it is still a little steep, you go back into your thinking mode and tell the customer you will make it a 30% discount. The customer looks at you and says OK.

Congratulations, you made a sale. You input all the information and discover that you still made a little profit and you will get you commission check for the sale. You pat yourself on the back, telling yourself, GOOD JOB!

Any rep who has been in the field for even a shot time has found them self in this exact position. And we all feel that we made the right decision. But now we need to ask ourselves, “How much is this sale costing me?” Most of you are thinking that I don’t read what I write, I just told you that you made a profit and will get a commission check, the sale didn’t cost anything, as a matter of fact we made money. I would almost agree with you if I didn’t already know the answer.

Before I tell you let me ask you another question, do you have a sales quota? I am sure you do because any sales rep I have ever met had a quota of some sort. So now think about how much the sale cost you.

If you usually had to write 12 orders to hit your quota you now need to write 13. Doesn’t sound like much does it? Or does it? What does it take to write an order? First you need a customer, you may need to call on 10 or more leads to find a customer so now you have 10 extra stops to make. I have been involved in outside sales for a long time now and I know that 10 stops makes a day in many cases, so we need to find an EXTRA day in our sales period (whatever the length of time is for you and your company). How many of us have extra time?

So now I hope you are starting to see the COST of making the sale.

Let’s look even deeper, if you dropped your price on this product or service, what is this customer going to do when you go back to sell them additional products or services? YEP you guessed right, the customer will once again ask for price cuts and you will once again be in the position of needing extra sales to hit quota.

A profitable sale is more than a sale that you made money on, it is a sale that helps you and your companies grow and sustain.

Lorin