Price vs Value

In sales one of the often overlooked premises is the difference between price and value. Understanding the difference between the two will frequently be the difference between a successful sales call and an unsuccessful one. Once you know the difference between the two you will be in a much better position to answer your prospect’s objections and be able to close more deals.

In simple terms price is the same as affordability. It comes down to whether or not your prospect has the means to pay for your product or service. Let’s say for example I am selling a widget for $10,000. Mr. Prospect loves my widget but when I tell him the cost ($10,000) he comes up with reasons he can not buy my widget. Unless I can quickly asses the problem is Mr. Prospect does not have $10,000 I will be wasting my breath telling him what a good deal my widget is and how many other people have paid $15,000 for the same widget. The bottom line is Mr. Prospect does not have $10,000 to spend.
Value on the other hand comes down to whether or not Mr. Prospect thinks my widget is worth $10,000. Mr. Prospect wants to see what the widget is going to do for him and how his life would be better with the widget.

Ultimately we are talking about the same widget for the same cost, and the customer could give the same objection (”I want to think it over”) but it needs to be handled differently based on our assessment of the situation.

When the objection is based on price this is the time to talk about things like financing, leasing, rental, layaway trade ins, ect. Mr. Prospect may not be able to afford $10,000 up front but perhaps $300 is workable for him.

Value on the other hand you want to talk about stories of how the widget has made some one else’s life better. When it comes to value nothing does a better job of selling for you than a good story. If Mr. Prospect is a realtor, then tell a story of how your friend Larry the realtor is using your widget successfully. Talk about the warranty, the money back guarantee, the training that comes along. When it comes to value you just need to show how the widget will make the life of Mr. Prospect a little bit better.

At the end of the day it is important to make sure you are giving the right information to the right person. Talking about the great warranty to someone who can not afford your product is a waste of breath, much the same way explaining your payment plan options to someone who sees no value in your product. By taking the correct approach and identifying the difference between price and value you will be able to close more deals and have an easier time doing so.