The Problem with Selling on Price Alone

Many people will tell you that selling on price gets the deal done, and quickly. It buys you market share, but.... nothing else. In tough times it is always a tempting prospect to reduce price and end up selling on price to gain more sales – thinking that your customers are only interested in price. In general, they aren’t. Yes they do want value but they want benefits too. Focus on the benefits you bring to your customers - sell these well and price will not be the driver for the purchase decision.

But if you still think reducing the price or just delivering a price proposition is for you then consider these points, because selling on price alone is generally a losing proposition for everyone.

1. Selling on price and you become a commodity, destroying value in the product and especially any future sales.
2. You set a trend with your customers who will expect a better ( and lower) price next time.
3. By lowering the price you reduce profit margins – it becomes harder to service the account, invest in the business and perhaps even to survive.
4. Customers are only loyal to you until someone else comes along who is selling on price and can give your customer a lower price than you. Then, it becomes a race to the bottom.

In the end the customer loses out with a low price since the seller can’t service the sales or they go out of business.

This quote from the 1880's by John Ruskin sums up the situation nicely:

“It’s unwise to pay too much, but it is worse to pay too little. When you pay too much you lose a little – that is all. When you pay too little, you sometimes lose everything because the thing you bought was incapable of doing the thing it was bought to do. The common law of business balance prohibits paying a little and getting a lot – it can’t be done. If you deal with the lowest bidder, it is well to add something for the risk you run, if you do that you will have enough to pay for something better”.