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Avoiding Price Wars

How to Demand More for Your Products & Services

What do you do when a potential buyer tells you your prices are too high?  I've noticed that most sellers react in one of 3 ways.  Most people GIVE IN, they GIVE UP, or they GET EVEN.

None of these solve your problem. In fact they make the problem worse. Let's see why:

Bad Reaction #1: Give In.
Sellers who "Give In" are so desperate to make the sale, that they drop their price when the buyer complains.

BUYER: "Really? $150 bucks? I can get the same thing down the street for $125!"

SELLER: [after much haggling back and forth] "OK, I'll do $125 for you, but don't tell your friends the deal I gave you."

This is the most common reaction. I hear it all the time, and yes -- when I first started my business and I was hungry to make a sale -- I did it too.  But whenever you make this decision, you're basically telling the buyer that you don't believe your product or service is worth what you are asking for it. 

This approach may get you the sale, but it kills your profits, and it slowly erodes the perceived value of what you're selling.  As soon as that competitor hears that you're matching his $125 price, he'll drop his price to $110.  Now you're back to the same problem you started with.  It's a vicious cycle that neither business can survive.

Bad Reaction #2: Give Up.
Sellers who "Give Up" stand firm on their price, but they let the buyer walk out the door.

BUYER: "Really? $150 bucks? I can get the same thing down the street for $125!"

SELLER: "There is no way I can sell this for $125. Those guys are crazy if they think they can sell it for that, but my price is firm. Sorry we couldn't make a deal."  

You've held your ground on price, but you are building a reputation for being overpriced. The buyer who just walked out the door sees no difference between you and the competition, and they start to label you to others as "too expensive."

Bad Reaction #3: Get Even.
Sellers who "Get Even" try to chip away at the reputation of their competition who's charging less.

BUYER: "Really? $150 bucks? I can get the same thing down the street for $125!"

SELLER: "The same thing? Have you seen the work those guys do? They don't know the first thing about how to do it the RIGHT way!"

The "Get Even" approach may help you win a few customers.  But it still creates problems for you long-term.  When your competitor chooses to get even, you will have a war on your hands.  Besides, the "Get Even" approach makes you look sketchy.  You don't build a lot of credibility points by attacking others.

How to Stay Profitable With Your Pricing...

All three reactions I just described are rooted in fear.  You are subtly telling people, "I don't really believe my offer is more valuable than the competition."

There's a smarter, more powerful solution.  Only a few sellers understand it, but those who do can practically name their price.  If you want to avoid the price wars, you must  package your products & services in a way that is incredibly valuable to your customers.

4 Steps to Add Tremendous Value to Your Products & Services

  1. Differentiate your product or service from everything else on the market.
  2. Demonstrate the value that already exists.
  3. Package it with something else that adds unique value. 
  4. Create an unprecedented customer experience.

In my next article, I will expand on all four of these steps to add value to your products & services. 


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