Give the Buyer a Fair Price

With customers asking for discounts left and right, it can be difficult to feel comfortable and confident with your pricing. If you're too high you might feel uncomfortable selling, and if they're too low, you don't make enough on each sale. Today sales trainer Tom Reilly shares how to make sure your price is right.

The easiest way to avoid price resistance is to give the buyer a fair price. The tough part is determining a fair price. Perceptions of fairness are based largely on emotion, which means buyers' reactions may not always be rational.

Buyers want to maximize the return on their investment. They want a good deal. Sellers, on the other hand, want to optimize their pricing. They want to apply prices effectively to gain a desirable return on sales. At first glance, this sounds like a zero-sum game-one winner and one loser. In practice, it can be win-win.

The search for the Grail of fair pricing reaches back through history, from contemporary economists to Adam Smith to Aristotle's study of ethics. Aristotle wrote, "equals should be treated equally and unequals unequally." Some may reach further to the beginning of time and ask, "Did Adam really understand the price he would pay for that apple?"

The central construct of win-win outcomes is equity: Is the product or service a fair exchange for what I give up to acquire it? Or, am I getting as good as I am giving? Both buyer and seller should be able to answer this question favorably. Satisfaction with the outcome of the transaction is tied to one's expectations of gain. This means sellers must understand the buyer's expectations of the return on investment that the buyer wants. Also, if the seller's expectations are not met, seller remorse sets in.

The way to begin your discussion of price is to determine in advance an equitable outcome for buyer and seller. If it is a good deal for the customer and a good deal for you, that sounds like a fair price to me.

Tom Reilly is the president of Tom Reilly Training. He is an authority on value-added selling, and speaks to thousands of salespeople and managers annually on increasing their value to their company and customers.