Imagine a potential buyer is pushing you to cut your price on a particular product or service that you offer.
How do you respond? By caving in to the buyer, or by holding firm at the risk of losing the sale?
When you succumb to a buyer’s pressure to cut your price, you create three future problems for yourself.
First, you are training your customer to ask for a price concession every time they return to do business with you.
Second, when word gets around you’re flexible on price, and it will, other customers are also going to press you for a lower price.
Third, previous customers that paid full price may feel cheated.
There is an alternative to just cutting your price: create another, less valuable, version of your product at a lower price point.
Then, when customers ask for a price reduction tell them “I can’t give you X for that price, but, if you really want to spend less, I can give you Y.”
In other words, if your customer asks for a price discount, they receive it only in exchange for a reduction in the benefits they’ll get from your product or service.
This pricing tactic forces buyers to trade-off value and price. They’ll be made better off paying a higher price and worse off paying a lower price.
By offering customers a diminished version of your product in exchange for getting a lower price, you’ll force them to reveal how price sensitive they really are.
You’ll get one of two results. Either you will call their bluff and they will pay for the additional value they want.
Or, if they truly don’t need all of the results your core product delivers, you will serve them better and at a lower price! What customer wouldn’t like that?