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Price: How to Differentiate Your Product When It's Priced Higher Than Market Equivalents (Part Two)

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Decision Criteria

I have another story to share. When I was living in London, I ran a computer support services company. We provided ''bodies'' — programmers who joined teams as systems analysts, programmers, or project managers and ran user-training programs. Our prices were approximately 50% higher than those of our nearest competitor, sometimes for the same person. We ostensibly had a similar product.

And, to add insult to injury, I made clients sign a sole-supplier contract stating they would use only my company for all their needs and they weren't even allowed to interview the candidates I sent. (I sent them the exact right person each time after a very thorough interview in which I discovered not only their specs but also their criteria regarding how the candidate would fit into the team or behave professionally in front of colleagues or be self-starting and creative, etc.)

Why did clients pay 50% more for the same person they could have gotten from another agency for 50% less? Because I met their criteria for solving their business problems. Anyone who hires a "body" wants that body to not only complete the necessary tasks but also fit in as quickly and as seamlessly as possible. They wanted the learning curve to be short and the agency/vendor to take responsibility for any problems that occurred at the moment they occurred. Price was not among their criteria.



To that end, I hired a full-time "make nice" guy whose sole job was to ensure that people were happy (both staff and clients), that all code was up to snuff, and that client-vendor issues, relationship issues, company politics issues, and any other potential problems were handled quickly. Clients learned to trust that whatever we handled for them would be handled quickly and professionally, and there was always someone they could call—day or night—with any problems they faced. A bonus was that I heard about new sales opportunities from the regular communication we all had. Best of all, I was freed up from fighting fires. All I had to do with my time was bring in new business.

But I had a problem with new prospects: they did not know how to buy me—especially since I was so much more expensive and made clients sign a sole-supplier contract. Prospects who would buy solely based on price were gun-shy, believing (rightly) that I might charge more. Prospects who couldn't trust that they would get the right person without an interview were very uncomfortable. What I was suggesting was out of the normal consideration in my field.

My job was to help them make their best decisions (How would you know that any agency could supply the best person for the job every time and save you the time/trouble of searching and interviewing? What would you need to know about working with my team that would lead you to believe that we could manage your solution and bring in the project on time and on budget?).

Not everyone chose to work with me. I had only 10-15% of the market. But my 24 competitors fought for the rest. I took the ones that were mine, put myself in a quality competition rather than a price competition, took only my share of the market, and ended up with a 42% net profit year after year.

What does this story say about how buyers buy? Buyers want what works. Buyers want to solve business problems. If they have business problems to solve, and your product will help them solve them effectively, and you can support them in managing the elements that are a part of the impetus and implementation of change, they will pay what you ask. (Note: If they still only want to buy on price, you must decide if they are the clients you want.)

How to Help Buyers Decide to Buy Your Product

What needs to happen for buyers to recognize that spending more for your product will give them what they want?

Help them decide how they will understand what a business solution will look like, and help them design it using your product. Too often, the technical or functional specs are the initial determinants of the type of solution they are seeking. But the specs don't manage the internal, political, and relationship issues they must manage before they can make a change and add something new.

Here are the issues a buyer must decide on before he or she chooses a solution:
  • What are the elements that have maintained their status quo until now? How will they know when it's time to do something different? (The answer to this is not easy, because if they truly needed your solution, they would have purchased it already.)

  • How do they plan on integrating your solution into their current solution/provider/product?

  • Who is currently working within the solution space that your product sits in, and how will they know that your solution is the best one to resolve their problem? How do you know that these are all the people necessary to design a solution that will manage the politics and relationship issues of internal change?

  • How will the entire team of decision makers know that they can work with you over time and ensure an easy implementation and appropriate follow-through?

  • Who in your prospect's organization were the decision makers that developed the current "fix" that your product would replace, and how do they know that they will agree on a different fix? How are they actually being included now? How will you be able to entertain any degree of control over how this historic/political minefield will be managed over time and brought into the fold?
Your prospects need to ask themselves these questions with you or without you. And the time it takes them to come up with their own answers is the length of the sales cycle. They have to do it anyway. If they do it with you, you can help lead them through their internal criteria that need to be managed prior to them making a product choice.

The Buying Facilitation Method® is a sequenced decision-facilitation model that leads your prospects through all of the decision criteria they will need to address prior to making a buying decision. It will teach the buyer how to include all of the people, policies, historic decisions, future initiatives, market factors, software issues, management issues, etc., that buyers need to address to ensure that they won't face massive disruption when the new solution is purchased.

Your job is to help the buyer design a solution that will address all of his or her criteria—not just the functional criteria that your product seems to manage but also the elements within his or her buying environment that created and maintain the problem. Your product is merely the solution that will address the buyer's problem. And price won't be an issue once you lead the buyer through the decision criteria and help him or her design the best solution and choose the best product—which he or she will do without making price the major criterion.

After all, do you want to sell? Or do you want to have someone buy?

You might want to learn more about this model by reading Buying Facilitation: The New Way to Sell That Influences and Expands Decisions (www.buyingfacilitation.com) or by purchasing Buying Facilitation in a Box to get introduced to the process itself.
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