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The Pricing Trap: Is Your Value Being Lost In The Cost?

The Pricing Trap: Is Your Value Being Lost In The Cost?
April 18, 2018

Rock'n'roll taught me the importance of selling my value to a customer, instead of the cost. How's that for an opener? Today, I'll be talking about how your business can benefit from selling VALUE over PRICE.

 

I love playing my guitar.

 

I still play, now and again, with a bunch of ageing rockers in a local bar - just for fun.

 

To those who know me, this might come as a bit of a surprise: I have always battled with stage fright. These days, you might have seen me billed as the speaker for a corporate event you’ve been to, or you might have seen me present, ‘Selling For The Non-Salesperson’ at a company conference.

 

But performing in public, solo, is something I’ve worked hard to master. Back in my days as a budding musician, I started booking some solo gigs in my area in a bid to get over my performance anxiety.

 

And to be honest, I never really enjoyed those solo gigs. And not just because they pushed me out of my comfort zone. But because it gets lonely up there on your own, playing, while everyone else is milling about and enjoying themselves. Especially when you’re used to being up there with a group of equally rowdy guys.

 

So, after a while, I packed in the solo gigs altogether. Music was my hobby (it still is) and somehow I’d managed to suck all the fun out of it.

 

The (Un)Valued Proposition

 

That was, until I received a phone call from a local hotel manager. The manager, who was a kindly man, said that he understood I played the guitar and would be interested in a gig in a few weeks time?

 

Now, this proposition (which may have excited me a few months before) didn’t raise any particular emotion in me, having already decided to redirect my ambitions of a solo career. But still, I wasn’t totally uninterested and so I heard him out.

 

He explained that he had 20 golfers booked in for a weekend stay, in a couple of weeks. They were to be staying the Saturday night but now for the catch - they had requested some live music to entertain them in the evening.

 

Yes, he was trying to book me!

 

As flattering as this was for a recently retired rock star, like myself, I wasn’t keen to get back up on stage as a solo performer.

 

But after a pause, I soon relented. I was flattered to have been headhunted and the gig was for a local hotel in my hometown, after all. I told the manager I’d take the gig and it would cost him £150 for two hours - cash.

 

There was silence on the other end of the phone. No words of thanks from the kindly manager.

 

His reply came, eventually,

 

“Oh, I thought about giving you a few pints of beer… on the house?”

 

“Well, I’d thought about giving you two hours of live music and entertainment for the bargain price of 150 quid,” I thought. But instead, I thanked him for his interest and politely declined. I could take it or leave it, at this point, so I was quite happy to walk away. Especially if the kindly manager wasn’t willing to pay the fee.

 

He mumbled something about getting back to me. And that was that. Or so I thought.

 

A few weeks later... he was back. If sounding a touch bashful on the phone.

 

“Are you still able to play on Saturday night?”

 

He obviously couldn’t find anyone else - or the other guys were charging more!

 

“Yes, but my terms are still the same.”

 

There was another pause.

 

“But for £150, you’ll get 30 years of experience and your pick from 400 songs – so you’ll end up with a happy bunch of golfers at the end of the night.”

 

He agreed. And as it turned out, we had a brilliant evening. I ended up playing way beyond my two-hour ‘set time’ and everyone was happy, including the kindly manager. I even got my free beer!

 

Lessons Learned About Sales Whilst Drinking Free Beer

 

1. Selling Your Value Not The Cost

 

This was probably the biggest sale of my life, in terms of the difference between the buyer’s expectation (free stuff) and my selling price (£150).


Neil Rackham, the sales trainer, argues that:

 

VALUE = Benefit – Cost

 

If I’d shown my value to the manager before I’d hit him with the cost, do you think he would have been so hasty to decline?

 

The problem was, that he didn’t see my real value until he’d seen me play. And for almost every sales negotiation - that’s much too late!

 

In order to sell your product or service successfully, you need to be able to communicate the value that you can bring to the customer. What can you do for them? Which pain points will you take away? This is what you’re selling, not the price of your service.

 

2. Value Yourself: Being Prepared to Walk Away

 

I was onto something when I walked away the first time. In fact, the fact that I valued myself enough to do so was my saving grace. If I hadn’t, I probably would have ended up doing the gig for free.

 

If you want a prospect to take you seriously, you need to be walking the walk. An important part of understanding your own value is being prepared to walk away when it’s not being recognised.

 

Be prepared to show or explain your value when selling, but know your bottom line when it comes to price - and stick to it.

 

Do you struggle to communicate your value, when pitching to potential customers? Our Sales Training Packages are suited to individual business owners, sales teams and corporate events, and can be tailored to address specific problem areas within your business. Our sessions can cover anything from basic selling skills for the non-salesperson to strategy and negotiation techniques that will prepare you to secure more lucrative contracts. Get in touch today to start boosting sales for your business.

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