There are eight basic ways to defend against a lower price. Master them all, and you’ll spend a lot less time negotiating and a lot more time closing deals. These eight, great differentiators are the keys to defending a high price against lower priced competitors:
* #1: Feature. Something in your offering is different than the competition’s. This can be something major (like a key technical feature) or something trivial (like a color). * #2: Brand. The customer is accustomed to purchasing your offering and automatically thinks of it as superior, or buys it more or less automatically when confronted with a choice. * #3: Convenience. Your product is easier or cheaper to purchase, or can be delivered faster, or can be replaced faster, or is easier to get serviced. * #4: Quality. Your product, even if exactly identical otherwise, is better made, lasts longer, and/or has better support and service. * #5: Personality. The customer prefers doing business with you personally, because you’ve built a long-term relationship. * #6: Integration. Your offering fits better with other products that the customer is going to purchase or is likely to purchase. * #7: Mutuality. Your business relationship with the customer is important to the customer’s customer. (E.g. “we only buy the best components.”) * #8: Strategy. The customer perceives the relationship with you and your firm as strategically valuable. (e.g. “We work with ACME, so we’re credible.”)
Whenever you find yourself selling against a lower price competitor, you should start positioning and repositioning your offering and your relationship with the customer to emphasize as many of these differentiators as possible.
Note that that, some of these differentiators (#2, #3, #5 and #8) can work even when you are selling the exact same product as the competition, but at a higher price.