Imagine you’re in the middle of a sales call to a potential customer, and imagine it’s been going great…. until it’s time to talk cost. “It’s too expensive, I can get a similar product cheaper from another supplier”, says the customer. If you’re a sales rep, then you’ll probably already be pretty familiar with this sort of scenario, but the big question is: what do you do? Is price matching in B2B sales an effective technique?
When this scenario happens, in many cases you’ll need to choose to head down one of two avenues: defend your product’s price, or price match your competitor. So which is the better option of the two?
Defending Your Product’s Price
If you choose not to match the price of a competitor, then your business will ideally be in a position where it feels able to adequately justify not only the price of the product, but also your decision.
Here are some reasons why a business may opt against price matching:
- Market research suggests that your prices are actually in line with your competitors
- Your business simply can’t afford to sell for less and still make an adequate profit
- You are willing to take a risk that your competitor cannot deliver similar value for the price
- You want to add value to your product through price justification
The main advantage of defending your price is that this can prove to be a successful long term sales strategy. After all, if a customer opts to return in the future, they do so not because of the price, but because of the value of your product, and the value they derive from being a customer of your business. But failing to price match is certainly a risky move. In fact, if a competitor is indeed able to offer a similar service, and similar product value, for a lower price, you could be entering into a never ending price war.
Price Matching Your Competitors
If you do choose to lower your price, either to price match a competitor or offer an even lower price, then it’s important to ensure that your business is financially stable and in a position to do so.
Here are some reasons why a business may choose to price match a competitor:
- You know that your product markup is bigger than it needs to be
- You know that customers feel satisfied when they successfully negotiate on price
- Your business can afford to sell for less in order to attract a product qualified lead
- Market research shows that similar products are widely available for less
The benefit of price matching is that it shows you’re flexible; that you value your customer’s needs; that you’re willing to accommodate your customers. It provides a good overall experience which could result in long term loyalty. However, keep in mind that when you price match, everything you have done to justify your product’s price — highlighting features, showing off USPs, and so on — goes straight out of the window. In some cases, it could cause a customer to question the credibility of your business.
There is really no right or wrong when it comes to price matching. However, there are considerations to take into account when choosing either one of the two avenues. Remember that low prices aren’t everything, and that businesses are often willing to pay more for better quality. If your product has something that others don’t, or if you can offer a better service that your competitors, do think twice before lowering your price. In cases where you feel it best to price match, be sure you have solid market research that supports the customer’s claims. Staying on top of pricing trends has never been more important.