The“Your Price Is Too High” Problem

By Jack Phelan

“We lost the order because our price was too high.” Those words always bother me and my guess is that they are equally upsetting to you, too. Whenever I hear them, something seems left out. The sentence is actually incomplete. Scratch a little deeper and the problem becomes clear. It should be stated, “We lost the order because we failed to help the customer understand and appreciate the value we bring to the table versus that of the lowest bidder.”

When the customer says, “Your price is too high,” that should be a red flag waving in our faces. More often than not, the customer is telling us that when all the bids are spread out on the table, the only measurable or discernible difference is the numbers. Based on that information, it’s normal to expect a buyer to go with the low price.

Here’s the point: If we fail to build the case for doing business with us, we don’t deserve to get the order. What is equally repugnant is the thought that we may actually drive business into the arms of the lowest bidder when we fail to arm our sales staff with reasons why paying us a slight premium is to the customer’s benefit.

To make the case even clearer, it is extremely dangerous to assume that customers will automatically conclude that it’s in their best interest to work with us. That’s the mistake that loses business.

I always challenge my team to show our customers that doing business with us is actually less costly than selecting the low bidder. You can, too. The place to begin is determining your value proposition:

What Do You Offer that's Important to the Customer?
This is not going to be found on a list of parts and prices. Even when you think the customer knows and appreciates you, restating your value proposition can be more critical than ever. That’s the moment when the competitor is coming through the door.

What Do You Do that Your Competitors Don't?
If your assessment indicates that everyone is doing just about the same things, then you have an opportunity to develop a value proposition that lets you stand out from the pack. Here are examples from our industry that may help you develop a value proposition for your business:

• Free parts delivery
• Customer training classes
• Online resources that include order status, equipment maintenance records, maintenance manuals and/or recommended spare parts information
• A noteworthy inventory of spare parts
• 24/7 service access
• In-house capabilities: engineering, control design and installers
• Planned maintenance programs.

Some in the industrial truck segment have the added hurdle of selling identical products that are marketed under two different names, much like Chevrolet and GMC trucks. If there is little or no difference in a product, then a value proposition that resonates with customers is critical. Making sure the sales staff uses it all the time is equally important. It’s easy to cut corners when you get busy and forget about always reinforcing why it’s smart for your customers to do business with you.

Overcoming the “price is too high” hurdle is a necessity—not an option—if we want to win more profitable business. It’s also possible. This is advice that serves the best interests of our customers and everyone in our industry as well.

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The MHEDA Journal • Second Quarter 2008 • Volume 37, No. 2 • Contents are Copyright © Data Key Communications, Inc.
All rights reserved. • Nothing may be reproduced in whole or part without written permission of the publisher.