I have seen the price issue play out among many salespeople and there seems to be one simple, philosophical difference between those who close high margins deals and those who are serial discounters. The key difference is understanding that pricing is based off what the buyer will pay for the product or service, not what the cost is to produce it.
I’ve seen this difference first-hand as one salesperson prices his product at a fairly high margin. However, the product is highly engineered and relatively unique in the market. One last helper – the company has a strong reputation in the market which certainly helps…greatly.
The other salesperson for the same company does not price products in the same manner. He is price wary before it is even mentioned by the prospect. He provides samples and prototypes for free (the other salesperson rightly charges for them since they have significant internal costs). He is quick to lower his price at the first sign of prospect resistance.
In assessing each salesperson some distinct traits were revealed. First, self-confidence does play a significant part in this process. The self-confident salesperson was the higher-margin salesperson. Second, the discounting salesperson had difficulty bringing up the pricing topic even with a well-qualified prospect.
Next to self-confidence, the clear difference between these two salespeople is how they determine the value of their solution. The high-margin salesperson sees the great value in the product and the advantage it provides to the customer. The low-margin salesperson sees the cost to manufacture and the obstacles the prospect places in front of the deal.
The difference in these perceptions consistently appears in the monthly margin report for each salesperson.