Price to Value, Not to Discount

You cannot sell a product and expect somebody to understand the value. Products only have two components: features and price. A process has many different avenues to provide value, and your job is to provide that value in a way that none of your competitors can.

Price your bid to match the value you are providing, and never, ever, a discount from a list price.

If you find yourself selling a discount, you have already lost.

As Seth Godin says: the worst case scenario about winning a race to the bottom is that you win.

The Status Quo Is Passive and Reactive

A standard salesperson is handed a list of products, a list price, and a discount window. You can give 3%, ask your manager for 5%, escalate to the district manager for 10%. In a commoditized world, that window is all you have. But the purpose of process selling is to understand that we do not live in a commoditized world.

When you offer a 3% discount as an act of good faith, you are talking about what you care about. You're in sales, you get paid on commission, you want to hit your number. You are showing them what you want. Most of the time your customers aren't even price sensitive. They don't care. And when you think about a 3% discount, you are thinking about yourself.

You Don't Know Your Value Yet

You might immediately go into your head and think, "My product is twice as fast," or "Mine's pink and all the other ones are blue." But you don't get to define the value, because it's not your values.

You might be Steph Curry. You can drain a basket from anywhere. But me, as the customer, I get to pick where the hoop goes.

That only happens when you open a real conversation about their process. Maybe your products are faster. Maybe your security of supply is so much better that you can guarantee things show up when they need to. Maybe the FDA specifically calls you out. The point is you have to understand what customers actually value, because if you don't, you cannot design an offer that matches their needs. You will find yourself offering a 3% discount to try and replace cost when you really want value.

Understanding their value also opens up an opportunity to get creative. Creativity leads to differentiation. When your customers compare you against competitors, they find something nobody else is offering. If that thing directly matches what they need, that's when you start winning.

Quantify the Value

A 3% discount is spectacularly easy to quantify. Having a technical support person available on the phone, in person, within 48 hours, seven days a week for three years, that's harder. This is where you have to work.

Nobody cares about "stronger." They need to know: this steel is 16% stronger, there's a 47% likelihood of the competitor's steel breaking, so you are 22% less likely to have a failed batch. The failed batch costs $3 million. My product saves you $660,000. That's how you quantify value.

Value is in the heart. Cost is in your brain. When you sell value, the cost becomes more and more irrelevant. The heart will win.

Some customers will hear "most advanced system ever built" and feel pride. They waited in line for the first iPhone. Others will hear the same thing and immediately think, "If this doesn't work, I'm going to get fired." The stronger the emotional response you can elicit, the higher your value, and the higher your cost can go.

I won't pay $20 for a hamburger right after I ate lunch. I definitely will at 10pm if I haven't eaten all day. You have to find your customer's hunger.

Nobody gets fired for choosing IBM. Hilariously antiquated, but 100% true, especially in pharma, where fear of FDA rejection slows technology adoption to a crawl. That fear is real, and it's yours to sell to.

Create Your Offer

Your target is to be 30% more expensive than every other bid. If you are not at minimum 30% higher, I guarantee you have not created value. Five carpet cleaners bid $1,000. You come in at $1,300 with the same offering. You lose. But if your mindset is "I'm coming in at $1,300, so what do I do that nobody else does?" maybe you bring in fans and dry the carpet same day, or use chemicals that won't hurt anybody's kid. You have to justify being higher, or you are forgotten.

Remember, almost nobody buys alone. There are technical people, procurement, executives, champions, and detractors. One document has to tell three different stories. The technical person does not care about ROI but the procurement guy does. The executive has to answer for the decision. The procurement guy is doing everything possible to get that 3% discount. That's their job. Your job is to create enough value that none of that matters.

What This Actually Looks Like

I had a customer with a project worth about $750,000 in equipment. After discovery, what I actually heard was that they wanted confidence. They were moving into new territory and wanted to know the smartest people were at the table and would support them until they were up and running.

So I built everything I could around that. Data analytics. In-person training, literally flying them across the world. Consumables. On-site support. Future planning. Every avenue of support I could muster. And as I kept assembling, that $750,000 started to grow. They started agreeing. The scope expanded. That project became $7 million, and there were no other bidders. Nobody else was even given the opportunity.

I wasn't 30% higher. I was 1,000% higher. But it didn’t matter, because price became irrelevant.

My rule of thumb: provide 3x in value, and asking for 1x back is fair. If I can show my equipment will return $20 million for you, then $6 million is the right price. Not because of list price, not because of discount, because that's what it's worth to you.

Sell the Value, Not the Discount

Don't open with price. If I tell you I own a car wash and it costs $50, you're not going to hear about the eco soap that keeps your car clean for the next year and a half. I lost you at $50.

I get emails every day about sunglasses at 50% off. I ignore every one. All I see is a company that doesn't even value their own product at $100. It's not a deal, it's a signal.

Even in a world where you are selling at a discount, don't sell a discount. Don't say, 'I'm going to give you 10% off.' Say, 'I battled for you. Here's the best I can do. Tomorrow it's 10% higher.'

One year, the company I worked for announced a mid-year price increase, 5% on everything starting July 1st. I have never had a bigger June. The fear of a price increase closed more sales than any discount I ever offered. Selling a discount just lowers your commission without actually incentivizing anyone to buy.

Bring It Home

Tie it all back. The customer told you where the hoop is. Now take the shot.

If flexibility and delivery speed matter most to them, sell that. Show them your backup plan, and your backup backup plan. Tell them you pre-arranged a tertiary supplier just in case, and put them on retainer. Yes, it's 30% more. But you're the only person who thought that deeply about what they needed. The customer either says, "That is spectacular, let's do it," or "I don't think I need that," but either way they're thinking, "I want to work with this person."

Even when you lose, you win.

Your job is to make them look good. You want them carrying your offer to their boss saying, "Check this out." Let them be the smart person who had the vision to bring you in. You need to let them win.

Once I told a customer my data analytics team would analyze every batch they ran for the first two years to give their partners confidence in their process, they stopped being able to live in a world where that didn't exist. It wasn't even a product we had sold before. I put it in their mind, and taking it away felt like a loss. A perceived loss becomes a differentiator, and when you don't have to compete, charge 30% more. They're happy to pay it.

Nobody in pharma buys products. Everybody buys processes.

I've never bought an individual Lego brick in my life, but man, I love making pirate ships.

Value is connected to hearts. Cost is connected to minds. The heart will win.