Live by Price, Die by Price…
Almost every week, I speak with someone who is concerned with where they should put their prices. I have mentioned it before that the Brides only have one measuring stick- Price. They don’t know how to ask questions regarding service or quality. Because they are trying to compare you to someone of less cost, who in many cases is less quality or less service or less value, you get nervous and unsure of where your prices are or should be. We are isolated because we don’t usually talk about our prices with our competition or people who do the same thing that we do.
Here are some figures I came across last week. This is based on a 25% profit margin
When you decrease prices by…
2%, you must increase sales by 3.7%
5%, you must increase sales 25%
10% you must increase sales by 66.7%
20% you must increase sales by 400%
When you increase prices…
A 2% increase means the same profit on 92.6 % of same volume
A 5% increase means the same profit on 83.3 % of the same volume
A 10% increase means the same profit on 71.4% of the same volume
A 20% increase means the same profit on 55.5% of the same volume.
Lowering your prices usually is not the answer. Maybe you are not comfortable with raises your prices either. Simply put, you probably need more business period. What happens when you get desperate is you start to think, act and smell desperate. When this happens , I guarantee that your prospects sense it and it will become harder and harder to get the sale to go through.
I know that sometimes you feel that you must take some gigs rather than stay home on a Saturday night, or that you must sell your product in order to compete with the big boys in town. There comes a point where you need other options and having an arsenal of sales skills will greatly help you.
Let me suggest that you consider one thing; negotiation. Usually there are only 2 outcomes to a sales appointment-a Yes or a No (there is always the polite “no” which comes in the form of “let me think about it”). In order to use negotiation, you need to have the proper sales process. Having a tried and true method of selling which works more times than not, will help you to negotiate because the prospect will have told you all of their wants and needs so you can either tell them you can meet their wants and needs, or you can’t.
Here is an example: You have been speaking to a Bride who has indicated that she has the need for your level of value, your level of offering and has indicated a budget that you are willing to work with, but may not be your given package price. You have a decision; do you go out for less and get the gig, or do you negotiate a better deal which will fit into her agenda. Let’s say you are a DJ- you could throw in more items and maintain your price (i.e. lights, fog, etc…) Because your process has answered all the critical questions of “if I can provide what you are looking for within your budget, does it make sense to move forward” before hand, you have earned the right to say “I have what you’re looking for at the price you’ve indicated you would pay- let’s go ahead”. At this point is she going to say “I’ve changed my mind”? She might. There are more unreasonable thing s in the world. More times than not, she is ready to go. TO get her to this point, however, you have to have your selling shoes on and be using a system that works.
My challenge to you is to start creating a system that will work. Just start- it doesn’t have to be perfect. Next week, I am going to speak to you about selling on emotion rather than logic. If you start to create this system this week, you will be well ahead and ready to understand next week’s message.
Until next week, Here’s to your Success!
Live by Price, Die by Price…