The Price to Cost Value Ratio

If you were to ask a room full of 1,000 salespeople (I have) what is the number one thing consumers want today, what do you think their answer would be? You guessed it: lowest price. and second? Quality? Right again, and third? Service. Bingo. Now, let’s switch scenes for a moment. Now I have a thousand consumers or business buyers in my audience and I ask them the same question. What do you think my answers would be?

Let me give you the most frequent responses I get from this group. 1-Service 2-Quality 3-Lowest price. Well folks, it seems like we have a perception gap between what people want and what they tell sellers they want. How can you explain that difference?

I think it is for the following reason. It is a matter of definition.

Price is defined as what we pay for something. We write a check, use cash or a credit card, and our account is debited.

Cost is what we pay for what we have bought over time. In other words, buy a cheap car and you’ll have higher utility bills and inconvenience. It has a higher cost over time than the lowest price you paid.

What do most consumers say they want, in your opinion? Yes, low price. But what do you think they really want? Yes again, low cost. So, it seems to me, we just need to better question prospects about what they really want and define the difference for them in terms of our product or service. What we are talking about here is customer value. And value is always ‘perceived’ value. Each prospect interprets the value on their own terms. Our job in selling is not always to lower the price (when that is usually not the real problem), but to try to better understand what the perceived value is for each prospect.

The only way to achieve this is through consistent and professional probing questions and then positioning your product or service appropriately in the prospect’s mind.

People don’t want cheap. They want value. People really don’t want things that will rust, break, be inconvenient, or hard to understand. They want life to be easier, less complicated, less stressful, happy, and more fun. Show them how your product or service can do all of this and I guarantee price will never be an issue.