 AN EASY SYSTEM TO COMPLETE A
COMPETTETIVE PRICING ANALYSIS
By Alice Wheaton of Alice Wheaton & Associates
This is a promise. Sometime during your sales career you
will be faced with being told, “we would have selected your company but you just
weren't competitive enough.” This one sentence strikes fear in the heart of even the
most stalwart, seasoned sales professional because how do we really do a true ‘apples
to apples’ comparison? One thing for sure is, if you don’t know the offerings of
your company that sets you apart from the crowd, you cannot expect to be able to
communicate this to your client. Below are some areas of completing a competitive
analysis!
•Leading Technology = Value - Know the value as a
result of your leading technologies and then price products/services appropriately. Making
excuses for premium pricing for premium value is inappropriate, it devalues you and the
company you represent.
• Supplier Delivery = Value - When jobs are
completed on time this can be leveraged into premium pricing. What good is lower pricing
if they can’t count on delivery?
• Price is a Result of Supply and Demand - When
there is a capacity limit due to high utilization of the equipment and the work force,
both are diverted to the market that will yield the highest profit. This is simply a fact
of life. Your client operates under the same business premise.
•Second Choice Position Leads to Premium Pricing
- If your company is not the premium supplier for a particular customer, the work, product
or services you provide as second choice supplier must be priced higher than if you were
the preferred supplier. There is a benefit to being second - in fact your margins could be
higher than the supplier of first choice!
It is recommend that you have the selling experience of completing a
Competitive Price Analysis. If pricing were the only issue, the client would not oblige
you in going through this process. By virtue of the fact that they go through this process
with you is a sign of trust, and they would have chosen you if price had not been the real
issue. These points will be an opportunity to educate your customer as to the overall
value of your product or service.
•Who is competitive supplier - domestic/import material?
•Is the material of like quality/specification, and fully approved for
application?
•What quantity - contractual volume guarantee or of spot nature?
•Can a competitor supply the same volume?
•Are the payment terms the same?
•How long is the offer valid?
•Is there a price stability/fixed price period?
•Are delivery terms identical?
•Is it tank car, tank truck, full truckload, or less than
truckload price? (Or the ‘container’ that fits your criteria.)
•Is there security of supply - domestic producer/import warehouse stock?
•Is the service package the same?
•Is price gross invoice/net of any rebates/discounts? If rebated, could rebate levels
really be achieved?
(Keep in mind, if you have been selling on price then you will lose it on price.)
Bid as per specifications; Charge for extras - Submit
a bid that attends to the key buying criteria of the tender but maintain pricing
flexibility on changes. Since changes, deletions and additions are not part of a standard
package, they will cost more to supply. Be sure to formally remind your client of this and
then don’t play ‘nice guy’ at the end for future consideration. That would
be magical thinking, “I’ll be nice now so the client will be nice (and choose
me) later.” The client has too much on his/her mind to be thinking about how nice
their supplier was on this one issue. You need to demonstrate ‘performance over
time.’ That’s what clients want and what they remember because you’re
consistently over performance makes their life easier!
Price More on Extension - On any tenders see to it
that an escalation clause is part of contract extensions, and follow up on this
immediately afterwards. When there is any increase in price it goes to the bottom line. A
good example of this is taking into consideration fluctuations in the exchange rate. It is
best to do this analysis before the issue arises because it appears to be coming from
justifying and defending otherwise. If selling were easy more people would be at the top
of their profession. This tool will help you get there.
Alice Wheaton speaks at conventions/corporations on
“Business Development by Design instead of by Default.” For a free info package
about her training videos, tapes, books & workshops, call 1.877.542.5423, email awheaton@home.com or visit: www.coldcalling.net |
