The age-old battle of Pirce vs. Cost. Who loses?

The age-old battle of Pirce vs. Cost. Who loses?

Written By Jeffrey Gitomer

KING OF SALES, The author of seventeen best-selling books including The Sales Bible, The Little Red Book of Selling, and The Little Gold Book of Yes! Attitude. His live coaching program, Sales Mastery, is available at


The ageold battle of Price vs. Cost. Who loses?

You, if you’re selling price.

Price is the fair market value (amount of money) one is asking for to acquire goods or services. Cost refers to the money it will take to do business over the lifetime usage (total value) of a product or service.

If your sales presentation revolves around price (or the false fear that the customer is only interested in the price), then your prospect will focus on price, too and misperceive what you’re selling as being price based, and or too expensive.

“But Jeffrey, you don’t understand,” you moan, “We’re in a commodity business. My customers buy price.”

No, you don’t understand. If the customer buys price, it’s because he perceives no additional value.

If your sales presentation centers around value, and offers help with the future and current challenges facing your customers, and the solutions you have to offer, then they will perceive your solution as being an investment in solving their problems.”

Big Opportunity: Many salespeople have the right products and services Yet, they struggle on the price vs. cost issue. But take heart, there’s a way to get rid of the price issue, however it requires hard work and creativity. Rats.
Big Mistake: Often the customer will play right into your hands and ask “how much does it COST?” And you erroneously give him the PRICE as an answer. Never give the price until the value and the cost (use of product and service over time) have been established.
Big Secret: Selling cost and value is a harder to sell this way that’s why so few salespeople rise to the top. There is no quick answer to this situation. Sorry. But there is good news. Not many salespeople can handle it, so if you become the price/cost master, you win. The secret is to be the master of how your product is used and your ability to communicate that value.
Success Strategy: Go out in the field and watch your products and services in use. Get real world examples of how the value of what you sell is employed. Become versed in how your product is used not what it does.
Success Tactic: Ask “value driven” questions. Determine how the customer uses what you sell, and how that use impacts the long term cost of your product or service in his business. Impact questions will draw out real issues as opposed to the stated issue: “How much is it?”
Big Reality Check: The difference between making a commodity sale vs. a value sale, is the difference between making a low profit sale vs. a good profit sale. Sales people get paid on profits, not sales. If there is no profit, there is no money left over for bonuses and commissions.
Bigger Reality Check: Many companies and salespeople will dub themselves as a “commodity sale” just because there’s a lot of competition and price cutting. When the word “commodity” creeps into the sales language, you are branding yourself, and establishing an internal mindset that lowers the morale of the sales team and discourages creative solution selling.
Biggest Reality Check: A sale based on price has no loyalty attached to it. If you make it on price, you’ll lose it in a heartbeat to the next lowest bidder.
Challenge: Leave the word “commodities” where it belongs in the corn and cattle markets.
Time is Money: It takes a little more time to make a (value driven) profitable sale than it does to make a (price driven) break even sale. Invest a little more time in learning how your customer builds his business, and you’ll earn a lot more money.
Success Mindset: Think “use of product” and “value over time” when you enter the sale, and you’ll leave with your own commodity the order.

Thirty to forty percent of people but price. That means that sixty to seventy percent will buy value. I recommend that you give the price buyers to your competition so they can make no money and starve. Concentrate on the people who buy value. That’s where the phrase “profitable relationship” has its basis in fact.

For any sale to blossom into a relationship, it must be mutually beneficial. Sell value and you may never be the lowest price, but you will always be the lowest cost.

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Jeffrey Gitomer, author of The Sales Bible, and Customer Satisfaction is Worthless, Customer Loyalty is Priceless. President of Charlottebased Buy Gitomer, he gives seminars, runs annual sales meetings, and conducts training programs on selling and customer service. He can be reached at 704/3331112 or email to