“Price is what you pay. Value is what you get.”
My colleague, a strategic adviser who helps reduce business costs, shared this nugget of wisdom as we talked about difficult money conversations.
As the world continues to transition out of the cost-cutting corporate strategy of the 1980s and 1990s, 2020 has forced businesses to look even closer at their bottom lines.
Uncertain about how recent world events will continue to impact a company’s livelihood, conversations that have typically been value-focused are suddenly price-focused again.
Price talks to transactions only with short-term insights. Value speaks to the larger picture of what a solution/product/conversation provides beyond the price transaction. It speaks to the long-term impact and benefits of the exchange.
Within value, conversations around personal impact, overall risk and deeper understanding of how the solution will support the business are brought to the surface. These help to qualify why the individual is looking for a solution in the first place.
“How much?” is a crucial question that all business owners must ask and carefully consider before making any investment, particularly these days.
How, then, can businesses support prospective customers to invest in value, not price, to better meet their long-term goals even during an extremely volatile time?
While the majority of this comes down to speaking to the pain the prospect is in and what life will be like afterwards, it’s imperative that we support them in understanding how to buy our solutions. This supports them in properly purchasing for their needs and business values. This often comes down to one question: Have you ever bought in X before?
In my business, most clients have never invested in brand or content development. They’re unaware of how to buy this type of service. Even more, they rarely understand how both brand and content tie into their larger business goals – the deeper value of brand strategy.
Depending on their answer, this question lets me know exactly how to support them with brand investment based on the overall value as defined by them.
If no …
This often happens with first-time buyers with minimal experience in the industry. With the scope determined, you can support them by saying, “Typically, a project of this size would range between X and Y.”
In doing this, you understand if they’re even prepared to work with that range and for the value they require. If so, the conversation can continue. If not, then you both know sooner than later that you’re not a fit.
If yes …
Continue to explore how and why they previously invested. This gives a basis for what their primary motivator for buying was, their previous buying habits and characteristics, and what they expect in value for price.
This allows you to remember why clients work with you in the first place. Things such as quality, location, delivery, insights and coaching add value to their overall business. If the prospect doesn’t align with the value you provide your ideal client, then they’re not your client. That’s okay. This helps them know that you’re not the right solution for them.
A key caveat is that price is not something to discuss at the beginning of a conversation. This approach is best used once you’ve taken the time to establish if you and the client are a good fit, along with the scope of the required solution. If you’re not the right fit or solution, price versus value becomes moot.
To say that price is not a factor in a business’s investment would be ignorant right now. Of course, price is a factor. Budgets, cash flow, revenue – all of the finances – still have to align.
However, we must be able to support our prospects in seeing the larger picture of value so price isn’t the sole factor. And this clarifies how to buy your solutions in relation to the full value behind it.
How are you balancing price-versus-value conversations? Share your insights and questions with Lindsay. Contact [email protected]