Pricing Integrity and Discounting Part II

David Byrd : Raven Call
David Byrd
David Byrd is the Founder and Chief Creative Officer for Raven Guru Marketing. Previously, he was the CMO and EVP of Sales for CloudRoute. Prior to CloudRoute, He was CMO at ANPI, CMO & EVP of Sales at Broadvox, VP of channels and Alliances for Telcordia and Director of eBusiness development with i2 Technologies.He has also held executive positions with Planet Hollywood Online, Hewlett-Packard, Tandem Computers, Sprint and Ericsson.
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Pricing Integrity and Discounting Part II

The prospect is requiring another round of discounts. This time it will affect your bottom line. You'll cover your cost but that's about it. You are concerned about your cash flow so you are seriously considering acquiescing to this demand to get the business and meet payroll one more month. You can always make up the difference with the next sale and guess what? You would be wrong. On the next sale, the prospect is going to ask for something similar and you will not have a different position to present. That is the crux of the matter. What do you say to protect your pricing integrity?

At Broadvox, I find the answer is very important because we are selling what is essentially a commodity, a phone line. There are many sources for a phone line, some good, and some bad. So, there is little to nothing unique about our product. Does that mean we have to compete on price alone? Absolutely not! It means we have to understand who we are as a company and sell that value to the customer. It also means that we have to evolve as a company and the value proposition needs to change as customer requirements and expectations change.

Take Volvo as an example. Volvo sold their square boxy cars on one major value proposition, safety. That worked for decades until their competitors and government standards improved safety for all cars. Volvo has watched it sales fall as it tries to define a new value proposition. The latest combines their safety message with styling and eco-friendly emissions. We'll see if that works. However, the concern for you should be "What is my value position to my customer base?

Do you remind the prospect that you have certified engineers to install, configure and service the products you sell? Do you mention the 7x24 support? Let them know the effort you and your organization put into defining the solution that will best address their current and future needs. Your job is not only to position products but also to position your company. At Broadvox, it was a simple task to position us as cheaper than the TDM/LEC alternative. Five years ago, it was enough to grow the business. Now it is just the baseline. Every ITSP is offering IP Communications cheaper than TDM. We will be cheaper than AT&T or Verizon. Now though we have to press the investments we have made in our people and network.

We promote our value add as experienced SIP engineers, SIP Trunking products that are certified on more IP PBXs than any other ITSP, running a 24x7 network operation center, delivering toll quality voice, providing reliable service and maintaining a robust network. These things are real and have tangible value. If a prospect wants us to reduce our prices to where we cannot provide this level of service and support, then we should walk away. A prospect needs to be told what we are doing to ensure their business telecommunications infrastructure performs to their expectations. If they are unwilling to pay for that, then we must be willing to pursue customers that will.

Your business is no different. You are providing engineering, training and support. These are tangible and desirable things. Position them proudly and as having substantial value. If the prospect does not want them, then let them select another company. You should pursue business that is both profitable and values your company. Walking away is not an easy thing to do, however, sometimes it is the right thing to do.

See you on Monday with another great recipe!

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what if your teen age kid absolutely refuses to let you buy a volvo, even the sporty one that is discounted about $10k?

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