Give the Buyer a Fair Price
January 29th, 2010
By Tom Reilly, author of “Crush Price Objections”
The easiest way to avoid price resistance is to give the buyer a fair price. The tough part is determining a fair price. Perceptions of fairness are based largely on emotion, which means buyers' reactions may not always be rational. In the last Sales Bytes, I wrote about equity as fundamental to Value-Added Selling. Here, I want to tie this to pricing your goods and services.
Buyers want to maximize the return on their investment. They want a good deal. Sellers, on the other hand, want to optimize their pricing. They want to apply prices effectively to gain a desirable return on sales. At first glance, this sounds like a zero-sum game–one winner and one loser. In practice, it can be win-win.
The search for the Grail of fair pricing reaches back through history, from contemporary economists to Adam Smith to Aristotle's study of ethics. Aristotle wrote, "equals should be treated equally and unequals unequally." Some may reach further to the beginning of time and ask, "Did Adam really understand the price he would pay for that apple?"
The central construct of win-win outcomes is equity: Is the product or service a fair exchange for what I give up to acquire it? Or, am I getting as good as I am giving? Both buyer and seller should be able to answer this question favorably. Satisfaction with the outcome of the transaction is tied to one's expectations of gain. This means sellers must understand the buyer's expectations of the return on investment that the buyer wants. Also, if the seller's expectations are not met, seller remorse sets in.
The way to begin your discussion of price is to determine in advance an equitable outcome for buyer and seller. If it is a good deal for the customer and a good deal for you, that sounds like a fair price to me.
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