When I was first starting out in my business, I faced a lot of competition from other businesses that were selling similar products at lower prices. It was tough to justify my higher prices to potential customers, but I knew that if I could just find the right ways to sell against them, I would be successful. Fortunately, there are a few key strategies on how to sell against lower priced competition.
How to Sell Against Lower Priced Competition: Quality, Unique Features, and Service
There are a few ways how to sell against lower priced competition. One way is to focus on the quality of your product.
If your product is of higher quality, then you can sell it at a higher price and customers will be willing to pay more. Another way is to focus on the unique features of your product.
If your product has unique features that the competition doesn’t have, then customers will be willing to pay more for it.
Finally, you can focus on the service that you provide. If you provide better service than the competition, then customers will be willing to pay more for your product.
5 Ways to Fight Back Cheaper Competitor
Don’t get caught up in a pricing war. Instead, differentiate yourself from the competition.
When you’re up against a competitor who’s offering the same product at a lower price, you can either lower your own price or find a way to make your offer stand out.
Discounting is an easy solution, but it reduces your profit margins and puts you at risk of further price cuts from competitors.
There are 5 different ways to stand out from the competition.
1. Highlight Distinguishing Features.
Show how your product has a feature that your competitors’ products lack so that customers see that as a “need-to-have” that warrants the higher costs.
Apple devices offer a wide range of apps, many of which are not available on Android devices. This gives Apple users access to a greater range of content and features, making them willing to pay a higher price for the overall product.
2. Qualify by Quality.
Your product may look similar to the competition’s on the surface, but it’s actually better made and more durable. Objective test results show that your product outperforms the competition in terms of quality and longevity.
3. Emphasize Convenience.
Your product is easier to purchase, support, or re-sell, as compared to your competition.
Amazon.com has an existing relationship with its customers that other bookstores do not have. The convenience of being able to quickly search through a large inventory of products, as well as the option to sell anything you buy, makes Amazon a popular option for many online shoppers.
4. Use Existing Relationships.
Your firm is trusted because customers see you as a resource that knows their specific business and can offer unique insights.
For example, when the “big eight” public accounting companies started offering consulting services, they charged a premium price because their customers were willing to pay extra for the business understanding that comes from having audited their books.
5. Leverage Strategic Relationships.
Your firm is able to provide the customer with invaluable insights regarding their business. These insights and advice allow the firm to help steer the direction of their customers’ businesses.
Sales representatives for large clients at companies like Apple, Microsoft, and HP will often play the role of IT consultant and unofficial member of the client’s IT team. They’ll help guide the overall IT strategy, and will act as an inside source when negotiating purchases with vendors.
Try multiple approaches.
These five strategies are effective for businesses of all sizes. And you may want to employ more than one.
Let’s say that most of your income is from just a couple of big clients. The last thing you want is for a competitor to undercut you and steal that customer from you.
It’s important to make sure your most valuable customers understand and appreciate your differentiators, like quality and convenience. You should also focus on building personal relationships and, if possible, strategic partnerships. This will help you solidify your position against competitors who may try to undercut you on price.
Another way you could provide value to your customers is by helping them in other areas of their businesses. You could also help them by cultivating individuals in their customer organizations to be a part of a public-facing case study.
You want to develop as many different points of differentiation as you can so that customers slowly begin to consider switching to another provider as unrealistic and unwise, even if that company offers lower prices.
8 Ways to Sell Against a Lower Price
There are 8 different tactics you can use when defending your prices against your competitors. Learn how to use them, and you won’t have to spend as much time negotiating and will be able to spend more time closing deals.
These 8 key differences are what make your product worth a higher price than your competitors.
- Brand. The buyer has become accustomed to buying your offerings and instinctively thinks they’re superior to anything else on the market.
- Convenience. Your product is easier to use, easier to replace, or easier to service.
- Personality. The customer likes you because you’ve built a long-lasting relationship with them over the years.
- Strategy. The client views your relationship with your firm as strategic, and believes that your relationship adds value.
- Mutuality. Your customer relationships are important to your customers’ customers.
- Feature. Your product offers something different than your competitors. This can be as important as a technological feature or a small thing like a color scheme.
- Quality. Your product is superior in one or more ways, such as being made of higher quality materials, lasting longer, or offering more support.
- Integration. Your product is a complementary one to the products or services that your customer is or will be purchasing.
While some of these differences (1, 2, 3, 4) may work even if you are offering the same product or service as your competition, at a slightly higher price, others (5, 6, 7, 8) are exclusive to your company.
Sell Against Lower: 4 Strategies to Win Against Price-Cutting Competitors
In a competitive market, it can be tempting to try and undercut your competition. But in the long run, this will hurt your credibility and margins more than it will help.
Your customers understand that you get what you pay for. Instead of trying to race your price-cutting competition to the bottom of the barrel, use the strengths of your products to create a value that outweighs a cheaper price tag.
Building a competitive advantage involves using these four key factors.
1. Stand by Your Premium Price.
While it may seem counter-intuitive, pricing your product or service at a premium – and sticking with it – can give you a competitive edge. While price is a factor, it’s seldom the primary motivator in making a purchase.
It’s natural to think that all buying decisions will be made based on price, but that’s not always the case.
When a buyer tells you price is the most important factor, it’s crucial that you stand firm on your higher price point. Often, buyers are wary of low prices, as it can signal a lower quality product or service.
Rather than cutting your price, stand firm on your pricing. This shows your prospects that you know what you’re talking about and that you’re not trying to undercut the competition.
2. Sell Value, Not Price.
Value, not price, is the most important factor to consider when making a purchase. A product may be cheap, but if it doesn’t provide value then it’s not worth buying. It’s important to be able to sell value in order to stand out from your competitors.
For example, what criteria do your prospects use to judge the value of a tire?
To answer your question, you’d have to first answer these questions:
- Where are you driving your car?
- Does the tire need to race through the Indy 500?
- Do you need an off-road tire?
To set yourself apart from your competitors, you need to customize your solution to meet the specific needs of your buyer.
3. Master Product Delivery.
Your sales success will largely depend on your ability to deliver your pitch. If you want to be able to command a higher price than your competition, you’ll need to deliver your sales pitch flawlessly.
In any competitive industry, it is essential that companies are able to deliver their products or services in a timely and efficient manner. If a company fails to do so, it risks losing customers and damaging relationships.
When a prospect tells you they can get the same product or service somewhere else for a lower price, ask why they’re talking to you. If they can buy it elsewhere, why aren’t they buying it there?
To justify the higher price point, you need to offer better customer service, including implementation and ongoing support. Providing timely support is essential to delivering this great service.
4. Practice Helpful Selling.
The key to success in sales is being able to contact your prospects in a way that’s convenient for them.
With today’s buyers being more in control than ever, they’re less likely to speak with a salesperson who only cares about closing a deal.
If you want your business to stand out from your competitors, you need to find ways to provide value to your customers. This can be achieved by solving their most pressing problems, which will lead to more loyal customers.
Customers who understand the value they’re getting and are willing to pay for it are more valuable than customers who only care about the price.
Conclusion: Sell Against Lower
If you’re selling a product or service that is priced higher than your competition, you need to be able to justify the price difference. We have shown you ways how to sell against lower priced competition without compromising your product quality.
