Sales Rep: “Our service only costs $125 per visit.”
Customer: “I’m currently paying $100 per visit.”
Sales Rep: “Then I can drop your price to $95 per visit.”
In your opinion, is this interaction an example of a skilled salesman? Does dropping the price of a product or service equate to a masterful sales technique?
I would argue it doesn’t take much skill or technique to make sales by just offering a less expensive option. That being noted, price-dropping can be an effective way to gain sales, but this technique should not be lauded as a sales skill.
Last Saturday my 7-year old son attempted to sell lemonade to our neighbors for $1 a cup. He soon realized this price point was too high so he dropped the price to $.25 a cup and effectively sold out of lemonade within the hour.
My son claimed the rush of lemonade sales was the result of him being a great salesman, but of course you and I know better. It was the price drop, not his selling prowess which accelerated his lemonade sales (In another post I’ll have to share how my discussion about profit margins went with my son).
Years ago I was talking with a pest control owner from Las Vegas who told me, “I don’t care how much my competitors sell their service for because I will beat anybody’s price.”
Surely there is a segment of the population who seeks out the best deals and will sacrifice quality over cost, and this Las Vegas business owner was absolutely killing that demographic. However, he also revealed corners he was forced to cut which enabled him to keep the lowest price point in the market.
Price-dropping has its place but should not be viewed as a sales technique. It’s mostly gimmick, linked to a compromise of quality.
I suppose my son and the Las Vegas owner would make great business partners as they shared the childlike business sense that by dropping price they were better businessmen and salesmen, when in reality neither was the case.
The real winners in these scenarios were the pest control seeking homeowners in Las Vegas and my thirsty neighbors.
Skilled sales reps don’t need to price drop. In fact, the mark of a great salesman is the ability to increase price without sacrificing production.
To learn more about how your sales team can increase sales without compromising price, visit my website at:
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