Of all the topics in sales, few are as talked-about as pricing and negotiation. Yet, with all that talk, few businesspeople are truly happy with the price points they are getting. Why?

The problem is that we’re our own worst enemies. We don’t really understand price, or what happens in a customer’s mind when price is quoted. This is a problem because sales is a sport that’s played inside the customer’s head. And if you can’t even find the arena, the chances are that you’re not going to win the game.

When you find out that the customer has been quoted a lower price than yours, what is your first thought? Perhaps that you have to ‘justify’ your higher price? Maybe you’re right….but not that often. The truth is that when the customer receives multiple quotes, one of which is significantly lower, the low price provider must justify his quality. This flips conventional thinking on its head, but it’s true. The presumption of quality always goes to the higher price.

Think about the last time that you went to buy, say, a suit. You looked at several suits, and the price points might have ranged anywhere from $400 to $1500. Which suits did you presume were of higher quality? The $1500 suit, right? But, let’s suppose you could only afford, or were only willing to buy, a $600 suit. Knowing that the $1500 suit was of the top quality, your mental processes shift. Now what you’re really wanting to know is how much of the $1500 suit’s quality can be found in the $600 suit.

It works the same way with any item. The higher price product or service gets to set the standard of quality in the customer’s mind. From that point forward, the only question is whether the customer’s perception of value for dollar is better with the lowest price product. That means that salespeople who sell higher-priced products should be proud of their price, not defensive. Of course, that’s the opposite of the way most salespeople sell – most salespeople are scared to death of their price.

Words and phrases that salespeople (in any industry) use to try to get business, but end up cutting their own throats:

• “I can save you money on…”
• “I’ll give you the best deal around…”
• “Can I bid on your business?”
• “I want the last shot at the price…”
• “If you find a lower price, call me…”

If you use any of these words or phrases, you are doing nothing more than asking the customer for permission to cut your price! In fact, you are telling them that the price you’ve just given doesn’t mean anything, and if they keep hammering on you, they can get a lower price. Why?

Because we are scared to death of losing the business. All these words and phrases are a defensive strategy. We’re afraid that our competitors will out-sell or out-price us, so we’re going to set up a safety net for us. We won’t lose an order on price, right? Wrong.

When you promise to save your customer money (or other nonsense), you always fulfill your promise. Rarely, however, do you get the business. Salespeople believe that they can “win” business by being cheaper. It’s a lazy way to sell, because all you have to do is make a stroke of a pen. The trouble is that, when you give a customer your “bottom” price, they still end up doing business with the person that they liked the best and who showed them the best offering – whether that was you or not.

In any selling process, there is a moment in time where the customer is ready to buy, and excited to buy. We need to take advantage of that moment in time. Here’s How!

Don’t say stupid stuff. Remember those phrases we talked about earlier? Don’t use ‘em.

Above all, never say the word “bid.” The word “bid” always implies multiple sources, and lowest-price-wins. It also implies delaying the buying decision until all the bids are in. Instead, offer proposals.

Keep it simple. The more whiz-bangs, colored lights, and brass bands you put into your proposal, the more the customer worries about being overpriced.

Standardize your pricing as much as possible. The best is the advertising rate card – “buy more, pay less.”

Make sure to focus on what the customer wants. Another characteristic of “bid” selling is that the salesperson goes right past the earlier parts of selling, and right to the pricing part.

Don’t start with an unrealistic price. When you start out with an artificially high price (such as the new car sticker price), you invite price negotiation. This is when both customer and salesperson are motivated by fear, and it removes all selling momentum.

When the customer asks, “how much,” answer them. For some reason, salespeople are scared to death of that question. Don’t be. The more words you use between “how much” and “this much,” the lower the expectations of the customer. That’s because they know you’re scared of your price.

The best, all-time greatest, way to hold your price is: Don’t be afraid to walk away from the deal. If you “have to have this business,” the customer has the advantage. If, on the other hand, you don’t “have to have” the business, you have the advantage.

If you are afraid of your price, your customers will know it, and they will take advantage of it.

I had a really powerful conversation with a friend of mine a few days ago. He’d just left his position of several years, managing a sales force selling to (through) independent distributors both small and medium sized. He’d done a nice job. His division had posted good growth, and he’d been recognized by his company. Yet, when I asked him why he left, he had an answer that amazed me.

“I left because I got frustrated. Only ten percent of the people I was dealing with are even relevant in today’s market, and ninety percent not only aren’t relevant, they don’t want to be.” Wow. That’s a huge statement. Not ‘productive’ or ‘growing,’ but ‘relevant.’ When I pressed him for more details, he explained that entirely too many people in his business are doing business the same way as they did 25 or even 50 years ago, and acting like the changes in the business world haven’t even happened. That, of course, put me in mind of our profession of selling – and made me wonder how relevant many of us are, or will be. But what does “relevant” mean?

Merriam-Webster defines “relevant” as: “Having significant or demonstrable bearing on the matter at hand.” That’s an interesting definition, isn’t it? If “the matter at hand” is the process of your customers accessing the goods and services that they need, and making profitable buying decisions, do you truly “Have significant or demonstrable bearing” on that? For too many salespeople, the answer is “no.” Don’t believe me? Think about the last sale you LOST. Why did you lose it? Give me an answer like “price,” or “perceived benefits,” or something of that nature, and you’ve just said that you were irrelevant in that process. Interesting little word, isn’t it?

What if “the matter at hand” is your company’s growth and profitability? Does the meaning of “relevant” change then? If you have “significant or demonstrable bearing” on your company’s growth and profitability, that means that YOU are a generator of new business, a retainer of current business, and a good developer of current accounts into higher profitability. Does that fit?

Or, going back to my friend – if “the matter at hand” is your place in your industry, are you taking the proper actions to stay current and involved, or are you simply riding the train until the track ends?

“Relevant” is actually a powerful word, isn’t it? One of the things we know is that in this day and age, being relevant means staying current and staying on top of the changes affecting our profession. For instance, I sold industrial supplies in the mid-90s. Back then there was no Internet, and to access the goods and services that they needed, my customers had to buy from me or from a competitive salesperson. I had “significand or demonstrable bearing on the matter at hand” simply by taking customer orders and making sure that their bearings and chains got to them when they needed them.

But what about now? I think about myself in that same job, but in today’s environment – and I know that those same customers could just as easily hop on the computer (or smartphone), plug in the part numbers that they needed on my company’s online ordering system, and the parts they needed would get there without my help at all. Therefore, my offering to take an order would be neither significant nor demonstably bearing on their ability to get their parts.

So, how could I – again, if I were in that job now – be relevant? I’d have to up my game. Instead of worrying about orders, I’d have to focus on providing benefits to my customers by asking lots of questions to keep my customer knowledge current and then keeping them abreast of technological developments, spotting best practices, and finding other ways that they could run their machines more efficiently. That would also keep me relevant to my company because the result would be happier customers, more referrals, a better reputation, more growth within my customer base, and a better platform to acquire new customers.

One of the key battles in today’s quickly changing and Internet driven business environment is just this – to be relevant. If you want to stay relevant, here are five quick steps to doing that.

1. Recognize that what got you here might not get you there. It’s an issue I see all the time – company owners and salespeople are married to ‘the way we’ve always done it,’ even when the ground is eroding around them.
2. Constantly update your knowledge. You should be aware of the resources available to you and your customers, not only through you, but through your competitors. Your customer is constantly updating his knowledge, and if you’re falling behind, he’ll know it before you do.
3. Make good decisions. Not all new technology is good or profitable technology. You have to expose yourself to as many new ideas as possible and then make good decisions about what to implement.
4. Commit to personal and professional growth. This might have been #1. Without a commitment to keep growing, both in terms of numbers and in terms of personal capabilities, you’re basically sticking your fingers in your ears and saying, “La, la, la” to avoid hearing the noise around you.
5. Staying relevant is costly, both in terms of time and treasure, but falling behind is even more costly. The difference is this: When you stay relevant and invest, you know when, where, and what the costs are. When you fall behind, you don’t even know the bill is being racked up until it’s time to pay.

Staying relevant is neither easy nor cheap. In fact, it can get really difficult sometimes because you have to swallow your pride. Unless you do, however, your place in the business world might go away without you knowing it.