"Is it possible that what we’re selling is just priced too high?" I hear that question a lot when troubleshooting sales issues for clients during my seminars and coaching sessions. Plus it’s worth noting that it’s a question that tends to turn up again and again like a bad penny particularly in challenging economic times. My answer is always the same: price isn’t the problem.

I'll repeat that again so the folks in your accounting department can hear me.Price isn’t the problem.
If you are already established in your market and you have set your prices competitively, then price-cutting is the last thing you should be thinking about as a solution boosting your sales. Even in today’s tumultuous marketplace. To be clear, you do need to make sure that you price yourself strategically because your price determines a lot about who will buy what you’re selling-not just in the short term, but in the years to come. Consider who you want to attract as a customer–a Tiffany’s™ minded consumer or a Walmart™ minded consumer? I am not making a value judgment here, just noting that for each consumer there is a corresponding strategy.
Let’s start by considering the risks of price cutting and then we’ll look at solutions.

Price can determine who you are and who your customers will be
The trouble with playing the low-end pricing game is that it comes with a cost. Costs influence how customers perceive your products or services and can even reshape who buys them and why they choose you over a competitor.

Sure, some cite high-volume retailers like Walmart™ as proof that low prices and sales success can go hand-in-hand. But here’s something worth considering. How many successful low-price/high-volume retailers or airlines can you name? Now name as many successful higher-priced, value-driven retailers you can think of (e.g., Banana Republic or American Airlines). I’ll bet that your first list is shorter than the second one.

The high-volume business model is one that most simply cannot emulate. Even fewer can sustain it. One of my mentors, Dan Kennedy, says it best: "being the second-lowest price has no advantages."If you are going to be the cheapest, be the cheapest, but that’s a very hard game to play.

Seasoned sales professionalswill attest that a low-pricing strategy can also have an adverse influence on who you do business with. Instead of attracting customers who appreciate dealing with a sales staff and organization focused on value and excellence, you risk attracting buyers with fewer expectations other than your ability to offer the lowest price. Not only is that expectation difficult to sustain over the long term, it also makes it much harder to engender an emotional connection with them. And without that magic ingredient, those customers are less likely to stick with you. And why should they? They chose you largely on price in the first place.

Low pricing can very quickly become a slippery slope-once you start down that path, it becomes increasingly difficult to recover from it. Instead, consider the solution that I share with my clients. Start by re-examining what it is that your customers are buying from you, what needs they have that compel them to make the decision to buy and why they choose to buy from you rather than from someone else. What value to you bring? And if necessary, defend yourself against a price-lowering competitor.

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