Why do salespeople cut price? And they do according to our research: 58% of salespeople and their managers will cut price if the customer requests it. Here are six reasons why salespeople cut price.
First, because they can. This is one of the strongest arguments I can make for why salespeople should not have pricing authority—because most will cut price when pressed by the customer.
Second, mixed management signals. When management tells the salesperson to get the order at any price—not to lose it—they are giving the salesperson permission to discount as heavily as needed. When management stresses volume over profitability, they are giving tacit permission to cut the price.
Third, lack of skills. When salespeople lack the training or the skills to hold the line on prices, they will be out-negotiated by customers. Whoever is better prepared for the negotiation will emerge victorious.
Fourth, lack of conviction. If salespeople do not believe that their product is better than the competition’s product, they will not present a compelling argument. If salespeople do not understand the value in their proposition, they will fail to convince the customer of its worth.
Fifth, fear. Those who fear losing the sale and succumb to this fear will cut the price. There is one thing these salespeople should fear more than losing the sale because of price—taking the business at too low a price.
Sixth, guilt. Some salespeople feel guilty charging higher prices than the competition charges. These salespeople may not see themselves paying that much for a product and feel bad charging customers those prices.
Salespeople are paid to sell. Anyone can cut the price; that takes neither talent or skill, just a sharp pencil and a calculator. Real salespeople work hard to hold the line on prices. Buyers are paid to ask for a cheaper price; salespeople are paid to say “No.”
Author byline: Tom Reilly is a professional speaker and author of twelve books. Tom is literally the guy who wrote the book on Value-Added Selling (McGraw-Hill, 2010), the book that started the value selling revolution. For more information on Tom’s presentations, training, and products, visit his website www.TomReillyTraining.com or call his office, 636-537-3360.