Commanding Pricing Power in a Competitive Market

Offering discounts isn't the best way to get a potential client to purchase your products or services. When your sales team relies on discounts over and over again, you might turn some potential customers off, which can decrease profits. Discover some ways to keep your pricing power in a competitive market when making sales pitches to prospects.

Distinguish Your Company From Others

What makes your products or services special? What makes your company stand out from others? Adding value by differentiating your products or services from other companies helps maintain your pricing power. Instead of taking money away from your company, help your prospects understand that you have something your rivals don't. This adds a perceived value without changing anything physically about what you have to offer.

To figure out how to distinguish your offer from other firms, get inside the heads of your potential customers. They want to know why your products are better, how they meet their specific needs and if your offer is worth the cost. If possible, add services to a product line to enhance its appeal rather than lower the product's cost. Products are physical, tangible things that anyone can replicate. Services that come with a product set your company apart and make your offer more valuable while keeping your pricing power intact.

For example, think about trying to get rid of a hornet's nest in your tree. You can buy a can of repellent for $10, or hire an exterminator for 10 times that amount. The exterminator is an expert who gets rid of the problem and suggests ways to keep the hornets away, while the can of repellent may put you in harm's way if you miss some of the angry hornets. Both methods get rid of the hornets, but one is safer and more effective and has long-lasting benefits for your property.

Focus on a Customer's Pain

Your customer has problems to solve, and it's your job to convince the prospect that your products or services solve that problem. Again, this adds value to your offer because you have a solution. If your customer cannot solve a problem internally, then your solution is worth the cost and your pricing power stays intact. Rather than coming across as a salesperson, your staff should come across as trusted advisers who know how turn the pains of a customer into gains.

Provide Clarity

Your pricing power may also be impacted by how you compensate your sales team and how discounts affect the company's bottom line. Make it clear that offering discounts may make the company miss profit goals. Missing profits may lead to layoffs in the sales staff or cuts to salaries. Salespeople would work harder to maintain prices if their pay was negatively impacted.

Maintaining your pricing power in a competitive market can be difficult, but it's not impossible. Decreasing the cost of your products or services impacts the company's bottom line, so it's best to consider other sales strategies.

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