Why the Bottom Line Isn't

Recently, I've been coaching a number of clients who work in highly competitive industries. It's not uncommon for these clients to have upwards of 30 direct competitors apiece - and that's just in the same town!

One subject that has been coming up a lot lately is what to do when the competition keeps dropping their prices. If you and your competitor sell the exact same product, this can be an extremely difficult situation. Regardless of how many times you remind them that "you get what you pay for," customers do tend to put the pressure on when they think they can get the same thing for less with someone else.

To counter this objection effectively, you must first believe that you are adding extra value for your customers, or providing a better service or product than your price-dropping competitors. If you aren't truly convinced that what you have to offer is better - in other words, if you can't justify a higher price to yourself - then you'll never be able to justify it to your customers.

Get the bad news out of the way first If your competitors always lower their prices, often the best thing you can do is bring it up early in the buying cycle with your prospects.

Yes - I'm suggesting you tell your customers that they can find what you're selling cheaper somewhere else. The key is in what you say, and how you say it.

For example, I usually say something like:

"Ms. X, I want you to know right up front that you will always be able to find a product similar to ours for less. While we are always competitive, we are not always the lowest price, and we are not always the most expensive. Knowing that we are not always the cheapest, does it make sense for us to move forward?" The answer you get will determine whether the customer is looking for value, or just looking for the lowest price.

The choice is yours

With the exception of Wal-Mart, no one wants to look cheap. As a result, the vast majority of clients will tell you that they're not interested in buying just the cheapest product or service.

In these cases, your response is simple: "Thanks for letting me know that. How will you be making your decision?" This takes you past discussing price, and onto a discussion of their true requirements.

But this approach is also highly effective even for those few people who will look you in the eye and say that if you aren't the cheapest, they don't want to do business with you.

Why?

Because it puts you in control. When someone tells you they only want to deal with you if you're the cheapest option, it gives you a choice. You can stay and play the discount game if there are good strategic reasons to do so. Or you can choose to walk away, and let your competitors lose money serving this prospect.