A question posed on a recent blog about discounting prices in an economic downturn, rekindled a previous discussion Sales Cooke conducted on The John Adam Show. In the podcast from that show, Sales Cooke talks about the real impact of a pricing strategy that resulted in a discounting of prices to gain more business.
Adjusting your price downward is a very risky and dangerous proposition. The perceived value of your product offering is based on the price you establish for it. Adjusting it downward implies that you have now devalued your own offering. When you devalue your product offering, you are sending a message to the market that you were overcharging in the first place; or, you realize now that your price is not justifiable.
On the flip side, you are now challenged with raising your prices later to recover your price reduction. That requires the ability to defend a price increase. Justifying the price increase means demonstrating value. If you already “discounted” your price earlier, a perceived devaluation, how can you now explain your price increase today? What has changed in your value proposition?
The best course of action is to focus on selling your value, engage in a better sales process, and stay the course on pricing. Yes, times are tough. And, the market is more competitive and cost conscious. This is the time to focus on adding and selling your value and making certain that your product delivers the benefits that you believe they do. Avoid the roller coaster behaviors of selling to price. Sell your value and sell well. Only good will follow.