How to Overcome the Price Objection in Selling
Price is, of course, an important factor when customers consider a purchase, but no one makes their decision based solely on price. Even price-conscious customers rate the actual sticker price of an item no higher than fourth on their internal ranking of the factors that will determine whether they buy or not. Near the top of the list, whether they are aware of it or not, is quality. As you are reading this book, ask yourself, “Do I drive the cheapest car I could possibly find?” Of course not. There were thousands of cheaper cars out there: cars with no doors, rusted out jalopies, barely-rolling wrecks. The cheapest new car in America in recent years has been the Nissan Versa, selling for under $13,000. Yet, they account for less than one half of one percent of all new cars sold in this country. Stated another way, 99.5% of car buyers chose to pay more for a new automobile than they had to. Three decades ago, the cheapest new car on the market was a Yugo, selling brand new for about $3000. But the company went bankrupt in short order as their customers chose to pay 5 to 10 times that much for a vehicle that they deemed a better value.
I used to drive a Lexus. It’s a luxury car produced by Toyota that varies only slightly from their far less-expensive Camry. Other than minor alterations to the vehicles’ bodies they are fundamentally the same car except for two factors: 1) the sticker price and, 2) the “L” on the hood. I estimate that I paid many thousands of dollars extra for that little stylized “L.” Why? Because the L brings cache, baby! It tells other people I’m successful, maybe even important. It screams that I have money (whether I do, or not). It provides a level of status that the Camry simply can’t. It inspires women to check out the driver. It gives me a feeling of being important and envied. It changes other people’s opinions of me before we even meet. I’m no longer a nobody when I crawl out of a Lexus. I’m a somebody you would like to meet and befriend. I didn’t just purchase a car; I bought the prestige that came with it. That’s why price isn’t the be-all and end-all of selling.
No one reading this book owns, as their primary in-home television set, a 5-inch black and white set. No one. But I saw one on eBay recently for $5, and it comes with a built-in AM/FM radio. Nevertheless, you paid hundreds (dare I say thousands?) of dollars for your television set, and it doesn’t even have a radio in it! Moreover, no one wears the cheapest clothes they can possibly find. Why? Because they have standards below which they refuse to fall irrespective of price. No one decorates their home with the cheapest furniture or drapes available. If you have a leak in your plumbing, you might get the teenager next door to fix it for twenty bucks. But instead, you hire a professional plumber at $80 per hour. No one lives in a tent, let alone a rented one. To thee contrary, you probably paid hundreds of thousands of dollars to purchase your home, when you could have lived at the Salvation Army for free, and they’d even provide your food at no charge! If you need a $12,000 operation, you don’t opt for the veterinarian, who offers to do it in his living room for $400. Quality matters deeply, even for those who are not consciously aware of it. In addition to price, customers also consider quality, value, service and benefits. Price is, even if only subconsciously, no higher than fifth on their pecking order of influencing factors.
Price-conscious customers may be fooled once by a cut-rate operation, choosing the lowest price over an item of better quality. However, if you make it a priority to stay in contact with the customer whose business was lost to you in favor of a cheaper price, you’ll often find a year or two later that they’re ready to return to you. By delivering fabulous quality, you also set yourself apart as being unique.
The above graph plots the perceived value (or desirability) of a product or service against its uniqueness. At the top left is a product that is utterly commonplace (that is, not at all unique) but nevertheless represents something people need, want, or value. Groceries, toys, office supplies, and consumer electronics fit into this category. They are must-have products. This is the Walmart corner. Virtually everything Walmart sells can be purchased in other places, but their products are at least items people want and need. The items they sell are highly in demand, but can also be found at Target, Kroger, Dollar General, Walgreens and hundreds of other outlets. Those who do business in the Walmart corner must outcompete others on price. They are able to make slight gains over competitors by improving service and convenience, but in most cases the merchants in this corner fight tenaciously to undercut each other on cost. As a result, margins shrink to such tiny levels in this corner that one must create huge sales volumes (as Walmart has done) in order to secure a good profit. A top-left business engages in a perpetual street brawl to win the patronage of cost-conscious consumers.
In the bottom right corner, you have a product or service that is completely unique but has no value. Among the occupants of this sad corner would be the man who can burp the national anthem, or the guy who eats a series of foods and can then throw up any one of them on demand, or the woman who can simultaneously play two recorders with her nose, one through each nostril. Completely unique, but of no value. I can balance a basketball on my nose. Hardly anyone else can, but this is a meaningless point because no one will pay me to demonstrate my rare talent. In fact, most people won’t even invest the 20 seconds it would take to watch me do it for free!
Years ago I came up with what I thought was a brilliant idea. I had gone through a divorce that I didn’t initiate or want. Not long after, I was walking through a mall that featured piped-in background music in all of the concourses. At that moment, I heard Frank Sinatra’s glorious voice singing his classic song, “You Make Me Feel So Young.” I knew the song well but I had a sudden humorous thought when I contrasted the lyrics with the way my ex had made me feel: she makes me feel like dung. I like to play with words and rhymes, so I began in the back of my head to write lyrics to that same well-known tune:
You make me feel like dung.
You make me feel there are blues to be sung,
Necks to be wrung, and fistfuls of mud to be slung!
And even when I’m 92, I’m gonna curse the day
We said, “I do,” ‘cause, you make me feel like dung.
I found the exercise so entertaining that I went home and wrote out two full verses so I could have the entire song to sing to myself in the privacy of my own car just for the comic relief it provided. Not long after, I heard an old Elvis tune on the radio and thought, “I could rewrite that one, too.” And I did. Over a period of months I rewrote 10 of the world’s greatest love songs to my ex! They seemed so funny that I decided to have them recorded. I went to Las Vegas and hired bands and celebrity impersonators to sing my songs so that they sounded exactly like the originals. The song titles were:
You Make Me Feel Like Dung
Only You (That’s All That You Think Of)
To All the Girls I Could Have Loved
The Wind Between My Cheeks
Friends in Law Places
I’m Gonna Hate You Forever
Are You Loathsome Tonight?
You Clog Up My Senses
You Dried Up My Life
In all, I invested about $30,000 producing and distributing the album. I waited eagerly by the radio (and telephone) as the hosts of a nationally syndicated program talked about my “hilarious” songs and played excerpts of them over the air. They even interviewed me live via phone and allowed me to give out my web address and 800 number and… only two people purchased a copy! As it turns out, there was only one problem with my brilliant idea…. nobody wanted it! It was utterly unique, professionally produced, and – if I do say so myself – quite funny. But there was no demand for it. To the public, it lacked value. It was a bottom-right corner product. Don’t make the mistake I did. Don’t waste any time or money in this corner searching for customers that don’t exist.
The lower left corner of the graph represents products which are in demand and available from many sources, but you sell them at a higher(?!) price than everyone else. Pets.com would be an example of “lower-left” thinking. This darling of the dot.com boom quickly went belly-up as customers realized that anything one might purchase at Pets.com could also be found at their local pet store at the same price. However, when you ordered from Pets.com you also had to pay shipping on top of that! So you paid more for the same product yet had to wait several days to get it in the mail. The only advantage of the site was home delivery, which you paid for, so there was no uniqueness at all and no increased value.
The only customers who shop in the lower left corner are people who are either so clueless or so rich they don’t care if they overpay for something they could easily get elsewhere at a lower price. I once had a man pay me $20,000 to do a speech I would have been happy to do for one fourth of that amount. He was so uninformed that he opened the conversation by apologetically stating that he “only” had $20,000 and asked if I would be willing to present to his staff for that amount. Sure! Vendors who do business in this bottom left quadrant spend their careers in search of those too clueless to know the value of a dollar or so rich or harried that they can’t be bothered to look for a better price elsewhere.
The top right corner of the graph is where you want to live. Top-right dwellers offer a product that is one-of-a-kind and heavily in demand. Fortune 500 companies pay consultants tens of thousands of dollars to tell them to aim for the upper right-hand corner (now, doesn’t this free blog seem like quite a deal? You just got $50,000 worth of consulting for nothing!). The upper right-hand corner delivers sizzle that quickens the pulse and makes people fork over their money to enjoy the emotional fix they crave. These customers are captives. If they want your product, they must buy from you and they must pay what you charge for it because nobody else offers it. If you really want an iPhone (and you do, don’t you?), you can’t buy one from Samsung or Motorola. Only Apple makes them. If you long to have that shapely “L” on your hood that makes others respect and envy you, you have to get a Lexus, because Ford doesn’t build them.
It should be noted that you can create your own uniqueness from an otherwise common product, just as Starbucks did. I am a “captive” customer of United Airlines. Of course, other airlines can fly me to identical places in similar airplanes for about the same cost, but when I book a flight (which I do scores of times each year) I never even consider using another airline unless forced to do so by my schedule or destination. So how did they transform their “top left” product (an airline seat) into a top right one, a product that only they can deliver? They gave me perks for my loyalty that I can’t get anywhere else. As a professional illusionist, I check large, heavy bags. I frequently must check 3 bags that all weigh over 50 pounds. Other airlines would charge me up to $250 in extra and overweight checked baggage fees for each one-way trip, costing me several thousand dollars per year. However, United Airlines offers its elite (regular) fliers the privilege of checking 3 bags up to 70 pounds apiece at no additional charge! No other airline comes close to this perk, to my knowledge, so I fly United almost exclusively. Not only do I fly them regularly, I monitor my usage closely to be certain that I maintain at least Platinum status on that airline.
Great salespeople stress quality, service, benefits, service, perks, and uniqueness in order to overcome the price objection.