Don’t Lower The Price, Increase The Perceived Value

Lowering the price to increase sales is a frequently attempted, usually failing method. It seldom works as planned and in fact, it could lower sales. That’s because it’s not the price that counts the most.

The true underlying principle for closing sales is to deliver a perception of value to the potential customer. It has been demonstrated time and again that price alone is not the determining factor in a customer’s decision-making process. It has been studied, and service, quality, guaranty, and perceived value are held to be more important than price nearly every time. These more important factors all combined can compel a buying customer to purchase something more expensive because of the perceived value the whole package appears to be offering. Thus, a training program, or in-house repair service, or whatever the perceived value as determined by all the benefits may be, supports a customer’s decision to purchase a more expensive offering over a less expensive one with lower perceived value. “Free” add-ons to the basic product or service being offered work very well, be them unrelated bonuses, additional accessory packages, upgrades at no additional charge, extended guarantees…  anything to increase perceived value.

In other situations, perceived value may be increased by simply preparing the sales presentation to demonstrate increased intrinsic value by identifying cost savings while operating this product or service which may result in extra longevity, future savings, or greater earning potential. All add value to the customer’s perception of what he is considering buying. Thus the retail return or gross profit percentage when reselling the product to the business purchaser may be more important than the purchase price. To be successful, any sales presentation or advertising and marketing program must include a serious effort to demonstrate and elevate the perception of value to the customer. If achieved, far more products or services will be sold.

To increase sales revenue and profitability, don’t lower the price, increase the perceived value.