Price Savings Buildup
Sometimes you may rep a premium product which also carries a premium price (like the original Iomega Bernoulli 90–prior to the Zip Drives) while other times you may rep a “cost effective,” yet less feature-rich alternative like PFS:Window Works or ReadRight OCR. For credibility’s sake it is usually preferred to rep a “premium” product–“if” you are capable of selling its premium features. Regardless, it is your job to properly position the product in the eyes of the dealer. One way to do this is to do a “price savings buildup.”
What is a “Price Savings Buildup?”
A “price savings buildup” is comparing a product to similar items showing the great savings, value and benefits that it provides.
What Are Ways You Can Do a Price Savings Buildup?
Each product you rep may or may not have all of the key selling features: a price advantage, exceptional quality, and unique feature benefits (we do represent some products that have all of the advantages, although it is not typical). However, each product should have a strong market edge that gives you a handle to promote. Following are examples of how to promote a product by price, quality and benefits.
If the product you rep has the lowest price in the industry, and the dealer is comfortable with it, then price may not be a factor–though quality might. If however, the product has a higher price that normal, or the dealer doesn’t know how it compares to its competition, you may have to help the dealer understand a product’s “value.”
When my field reps were showing Ask*Me 2,000, a multimedia “authoring” program, the multimedia industry was in infancy and unknowing dealers often questioned Ask*Me’s $495 price. For this product, a price comparison was all that was needed:
- “Depending on the manufacture, most similar authoring programs run between $695 and $8,000. For example, Icon Author list for $695, Instant Replay sells for $595 and Authorware sells for $7,995! Our product, which has more features and ease of use than them all, usually sells for $995 but at this time, during our saturation campaign we’ve lowered it to just $495 list. That’s 50% off the regular price! Of course dealer copies are only $49–the cost of materials.”
The dealer copy, which is all we were really there to sell, appeared negligible–in comparison.
With the early Iomega 90 Bernoulli Box, the $1,295 list price for a 90 megabyte drive was almost always questioned–especially since most well known 80-120 megabyte hard drives at the time were just $350-$420 list. In this case, we couldn’t just compare prices–we would loose–instead we had to compare usage, quality, features and expandability:
- “The Bernoulli floppy has approximately the same life span as a comparable hard drive, and a comparable speed–until you drop it (SLAM the disk down on the floor). That’s where the comparison ends! It can handle over 1,000 G’s, versus 8.
- Question… how much is your data worth? You can also take it out of a system at night–providing unequaled security–again, how much is your data worth? In addition, it also has the cheapest overall “cost.”
- The Bernoulli “method” really saves money once someone gets a couple of disk. From 350 megabytes on it is the most cost effective “live” storage available and unlike a tape drive the data is constantly available “at hard drive speed.” Besides, ever priced a fast parallel tape drive lately? A quality 120 meg (show picture) parallel tape unit retails for $1,300. It would be a disservice to sell your customer a 190 ms $1,300 parallel tape drive when a 21 ms Bernoulli is cheaper, faster and can also use a parallel adapter for FAST interchangeability between laptops. Any questions?”
We should never be ashamed or back down when showing a “premium” product. There are two prices associated with most goods, one is the actual dollar price and the other is the cost. For example, while on a trip I pulled into a gas station and purchased a “discount” remake of a favorite album. The tape price was only $4.95, but the “cost” was outrageous! No sooner did I play the tape, one time, when the tape broke. The manufacturer of my $4.95 tape used cheap materials (or in terms of software–poor programming) and I saved $3.00 off the regular “quality manufacturer’s” price. However, my cost for each playing was $4.95! On the other hand, I purchased a tape that was recorded on higher quality stock and I estimate it lasted well over 100 playings, costing less than eight cents per playing!
In terms of software and hardware, the initial low “price” may seem cheap but the extra amount of learning time and down time could make the “cost” considerably higher. Remember: You can pay a higher initial price now–and cry once, or you can pay a “cheap” price and cry every time you can’t get it to work!
- What is a “price-savings build up?”
- Build up one of your current products against its competitors. Take some time to build a good case–it is worth spending the extra time and imagination now than feeling the pain of unnecessary rejection later.
- Product Name: __________________________
- a) Price comparison
- b) Quality comparison