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Saturday, 22 September 2012

Selling against Value, with Price.


In these frugal days, Price,
or as Buyers refer to it “COST”, is a very important factor in their Decision Making.

Sometimes, clever salespeople reverse the Price Advantage by offering more VALUE.

It’s a Formula:
Value = Benefits less Cost

Their “Added Value” comes from offering MORE benefits to cover their EXTRA Cost (higher Price)

For example:

discountThey may claim that “due to lower running costs”,
their Total Value over five years is better than yours.
However, YOUR PRICE is less than theirs is, NOW!



So, “How do you WIN on Price?”


There is an embedded preference in most people.
In Human Decision Making we have a marked preference
for Rewards (payback or benefits) that arrive EARLIER.


People prefer Rewards sooner, rather than later.

Would you rather have $1 now or wait a year for $3?

If you chose a dollar now, then you are in the majority and you exhibit PRESENT BIAS.


You like the certainty of rewards now,

rather than the hope for reward at some future date.

A future which may, or may not, come!

discounts present biasWhen selling on PRICE, you have to appeal to your Buyers “Present Bias”.
The Value of a lower Price is available NOW.
The Value of “added” benefits only occurs over time and has a lower value than a Reward instantly available!

Who knows
if the projected value over five years will occur?
Who will get the credit, perhaps your successor?

The Time Value of Benefits discounts with time.
The certainty of reward and recognition of a lower Price, to you a lower COST, is available now.



So, when Selling on Price against a “Value” Seller, make sure you invoke the “Present Bias”.

Make sure your Buyer knows they can have their REWARD from you NOW!

How does PRICE link to Sales forecasts and missed Targets?



  1. My CEO and I were just talking about this! Jon Birdsong here, first time reader and found your site after seeing your comment over at The SalesHunter.

    My CEO and I were talking about how products position themselves as the value vs. cost. Sales reps can do the same thing as well.


    1. Thanks Jon,

      Products and Markets position themselves.
      Often there is Price market AND a Value Market,
      thats why Airlines have coach and first class.
      (Or Bull Rings have sun or shade seating) ;-)

      nice meeting you.