Before 2021, I never spent more than three weeks away from our beautiful island. This year I spent the first five months with my daughter and family in Dubai. During this time, I immersed myself even more in the Dubai business community. I’ve been there for the past 15 years and got a feel for the incredible dynamic culture and entrepreneurial spirit that dominates its business landscape. But I was also familiar with the tedious focus on price, price, and price again. Every business discussion seems to start with price, as if it were the only one or, at least, the most important purchase criterion. You tend to get carried away, whether you are a buyer or a seller. For example, there is a local company that imports and distributes packaging materials within the Gulf Cooperation Council (GCC). The owner described the history of the business and the dynamics of the industry to me. For him, the only important question was the price. However, when we discussed the dynamics of its sector, I identified other important issues for its customers, such as continuity of supply, quality, 24/7 access, support technical and, of course, the terms of payment. This organization was missing a trick in its own capacity to achieve higher prices and therefore more margin. And it shows in its financial statements. Example 2: Due to heavy online SEO activity in the area, my business regularly receives inquiries through a localized website. Usually, potential buyers send an email or call with a specific request. This could be advice on culture or strategy, or help with customer experience programs. I mention this to illustrate that these services are obviously not simple, being adapted to each client. Yet in any case, the first question buyers ask before any conversation is “how much is it going to cost?” This is not just a UAE-specific phenomenon. We have it here too, perhaps to a lesser degree. But the pandemic seems to have exaggerated it. Some sellers and buyers seem to think the discount is the way to get money back due to the foreclosure hiatus. On this basis, I would like to challenge you to broaden your thinking about the composition of your proposal. For many of us, the products or services we sell are commodities. In other words, we have many competitors who can offer the same. Now, unless you are the Ryanair in your industry that has the lowest cost base in your industry and therefore can beat anyone on price, you need to avoid the race to the bottom. It is already paved with the corpses of others who have sacrificed margin to secure a deal. This too much emphasis on prices is an obstacle to honest and transparent business transactions. Of course, the price is important because no one wants to get ripped off. But whether you are a seller or a buyer, there is another way.
Tips for getting premium prices
To be relevant and add value, we need to think about the whole experience we provide to our customers.
The three-legged stool of product, people and place will inspire you to consider other features and value-added benefits. What’s your USP? Can you identify any unique benefits for your offering under each P?
Before presenting your offer, take the time to understand the triggers or “pain points” in your client’s world.
Using the additional information from your broader perspective (in step one), ask the right questions to determine the key priority criteria for the customer to make a decision.
Present your offer by focusing on the priorities the customer has already told you about.
If your customer raises a price objection, see it not as a rejection, but as an indication that your offer is not there yet. Take the time to identify the gap between the price of your offer and that of your competitors.
Ask your client what budget they are working on or what they are comparing you to. This information is gold dust for you.
Sell away. Once you know exactly what you are up against, point out the additional benefits of your offer to justify the deviation i.e. your higher price.
The last word
Differentiating on the price alone is really difficult. Customer experience is the new battleground for doing business and therefore the above 3Ps are a key framework in shaping your offering. Even if your competitor can do the same, value every benefit of your solution. It takes the same number of beans to brew a cup of coffee at home, in a cafe, or in a five-star hotel.
Why doesn’t the hotel guest even blink at the price? This is because the overall experience difference between a fast food coffee shop and a five star hotel is palpable.
You too can do this by knowing your added value and then “selling the gap”. And buyers, this applies to you too, in reverse.