As business women (and men), we’re all in the game to make a profit. And while there are many factors that affect price, including features, demand, psychology (and the list goes on), it’s vital to recognize that ultimately, we do business with people.
Different people have different expectations when they purchase services and products. Especially if those people belong to large organizations.
- Price buyers
- Relationship buyers
- Value buyers
- Poker players
This is the first post in a series of four posts, that will focus on these different types of buyers.
In this post, I focus on price buyers and share how to identify them, as well as what you need to do in order to sell to them.
What are price buyers?
Price buyers are buyers who only care about price – the lowest possible price. They’re sophisticated buyers who don’t care about value, relationships or anything else.
As a result, doing business with price buyers may not always be the best thing for your business and so it’s important to know when to walk away.
Keep in mind: not all buyers are your buyers. You can find yourself losing money if you allow your buyers to choose you over you choosing them.
How to identify price buyers
There are many advantages to working with large companies. But on the flip side, according to the book Pricing with Confidence, “big companies are more than twice as likely to be price buyers.”
Clues that you’re dealing with a price buyer:
- They’re very specific about what they want and are not looking for any extra features or benefits
- They’re not interested in hearing about the value you have to offer
- They avoid forging relationships
- You’re just one of many approved vendors for the same type of product or service
- They seem headstrong, demanding and controlling
- They invite you to bid on business with extensive specifications
- They’re aggressive in negotiations to get you to agree to rock-bottom prices
How to sell to price buyers
Strip away features and services that provide added value
If you’re looking to do business with a price buyer, you’ll have to make sure that your costs are as low as possible and that you’re not offering any extra value.
Be willing to sell at very low margins
If you’re looking to do business with price buyers, you’re going to have to offer a rock-bottom price. That means that not only your costs, but also your profit margins are going to be very low.
Final words about price buyers
- Don’t think that you can change a price buyer by offering them more value. You can’t. The only thing they’re looking for is a low price.
- Differentiate between the price buyers that you can serve at a profit and those you can’t and be ready to walk away.
- Don’t be tempted to lower your price because the buyer promises you more volume. You might find that you need to double or triple your volume in order to keep current profits. Make sure you do your math and know at what point it’s more profitable to walk away.