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The Importance Of Price In The Sales Process

Price is a crucial factor in the sales process as it determines the value of the product or service being offered. Price is often the deciding factor for customers when choosing whether to purchase a product or service, as it directly affects their purchasing power. The importance of price in the sales process can be summarised in the following points:

  1. It determines the profitability of the business: Price plays a key role in determining the profitability of a business. Pricing a product too high may lead to decreased sales, while pricing it too low may result in reduced profits. Therefore, finding the right price point that maximizes both sales and profits is crucial for any business.
  2. It affects the perceived value of the product: The price of a product or service can affect how it is perceived by customers. A higher price can imply higher quality, while a lower price may indicate a lower quality. Therefore, setting the right price that accurately reflects the product’s value is essential in ensuring customer satisfaction.
  3. It helps to differentiate from competitors: Price can be used as a tool to differentiate a product or service from competitors. Offering a lower price than competitors can attract customers who are price-sensitive, while a higher price may be used to position the product as a premium or luxury item.
  4. It influences purchase decisions: Price is often a primary consideration for customers when making a purchase decision. Offering a fair and competitive price can help to persuade customers to choose your product or service over competitors.
  5. It affects customer loyalty: Price can also affect customer loyalty. If customers feel that they are getting good value for their money, they are more likely to become repeat customers. However, if they feel that the price is too high or unfair, they may switch to competitors or seek out alternative products or services.

Price is a crucial factor in the sales process, as it impacts the profitability of the business, the perceived value of the product, the ability to differentiate from competitors, purchase decisions, and customer loyalty. It is therefore important to carefully consider pricing strategies and find the right balance between pricing and value.

The Importance Of Price In The Sales Process

Want to pick up the phone and speak to us about your pricing challenges?
Call us on: 01733 361729

7 Steps To Pricing Within Sales

Pricing a product or service that you sell can be a scary experience and the following are common issues / challenges that many businesses come up against.

  1. Within the sales process I don’t know when to mention price
  2. I’m just not sure if my price is right
  3. When is it appropriate to offer a discount
  4. How can I maximise the performance of any discounts offered
  5. I put my proposal in to the prospect / customer and then nothing happens
  6. I really struggle to get the right price communicated within my proposals

If you struggle with any of the above then this 6 stage process may offer some guidance

Step 1: Preparation

  • Make sure that you know the full cost of your product or service. Its not good enough to just consider the product cost in isolation you need to know the complete set of costs associated with providing the product
  • Evaluate the product / service benefits that your proposition provides
  • Conduct detailed research into your competitors costs.
    • A short while ago we conducted research for a client on competitors. Two of the main competitors who were significantly undercutting on price were also making significant (what appeared unsustainable losses)
    • Conduct detailed analysis to identify market affordability
      • There is a huge amount of work required here to identify issues of customer value and importance (more about this in future articles)

Step 2: Introduction

  • The initial interaction. They always say you never get a second chance of first impressions. So if you are selling a premium service you need to create that impression. If you are selling a bargain basement, low quality weight loss item perhaps this needs a different approach

Steps 3 & 4: Questioning and presenting

This can be summarised by the following 4 steps

  • Ask – you need to identify what are the issues / pains (metaphorically) that the customer is looking to resolve
  • Listen (very important to conduct in an active listening manner). The rationale of two ears and 1 mouth use them in that ratio is a very sound piece of advice
  • Interpret  – to make sure you have really understood what is being communicated
  • Solve – present what you would be a solution to the above three points

Step 5: Objection handling

It is often stated that there are two types of objections
True objections – whereby there is a completely valid reason for not being able to purchase. I would love to buy your double glazing but I live in a tent
False objections – which can occur for a number of reason

  • Perhaps the person has misunderstood you
  • They are used as a veil for misgivings
  • The person just wants more information
  • The great way to better evaluate these false objections is to ask more questions without assuming

Step 6: Closing

Often the best way to try and close the sale is to shut up

Step 7: Follow up

  • After the offer has been submitted. If they don’t want to purchase immediately as k the prospect when THEY would like you to contact them for a decision
  • After the order deliver the product or service EXACTLY as described

The Importance Of Price In The Sales Process

If you would like to find out more about the importance of pricing contact Andrew Goode an experienced business development professional. on 01733 361729 or e mail  For more information on pricing and strategy click here

The Importance Pricing

Within any business the price for which you ultimately sell your products or services will impact on your profit.
Pricing is a very complex issue and whole books have been written on pricing principles in this article I wanted to consider some of the nuances and complexities in a really simple example (that hopefully translates into your more complex business situations)

Stage 1: Price setting

So how do you go about setting your initial pricing. For many it is based on looking at what competitors are pricing at and then offering a lower price. Three key points here

  • What is your unit cost ?
  • How did your competitors arrive at their price points
  • Are your competitors profitable

As our illustration shows all things being equal if I can buy the exact same product for a lower price customers will beat a path to buy my product!

pricing for profit

Stage 2: Price competition

So offer your exact same product (or service) at a lower cost. What is the possible reaction of your competitors.
One option available to them is to reduce their price to the customer. Now they may be highly efficient at what they do and have a lower unit price than you.
So they lower their price, and as customers have no loyalty in buying the exact similar product they leave you to buy from the competition

pricing for profit

Stage 3: Price reduction response

Now at this stage you still havent considered strategic marketing and as you need customers you decide that  the best approach is to lower your prices once more . Even though your margins are wafer thin you are working on the basis that you will sell high volumes at this bargain price.

pricing for profit

Stage 4: An alternative approach use marketing as the basis for pricing

At this point your competitor (who doesn’t understand marketing or accounting) reduces their price further.
Thankfully you had been preparing for the cycle of continuous margin reduction and so have been preparing to compete through branding and quality.
So now by clearly differentiating your product, improving the value it provides to the consumers and building a brand experience that customers desire
With a price point that allows you the capability to further develop solutions that meet the needs of your customers.

pricing for profit

Smarter Price Promotions – Seven Points To Consider

Dumb or Smart Promotional Pricing

In pricing it is crucial to consider what is going on in the customers mind and what you are looking to achieve as a business. From our observation there are many companies who appear to be operating a dumb approach to pricing promotions. The following seven points will hopefully help you think about a smarter way of looking at promotions.

7 Ways To Better Promotions

  1. Whilst you may be looking at offering a discount. You should recognise that the price discount is purely there to grab attention. By getting the attention this is now the start of the process
  2. Every promotion should be controlled. There should be clear start and completion points and a clear exit plan
  3. It should be explicitly clear at the start of the promotion the target audience that you are trying to engage with. Having a promotion in uk that is suitable for all is going to work
  4. A smart promotion should be looking to get the customer to buy and complete an additional behaviour.
  5. The promotion should be an integrated part of the marketing mix and not just a random, impetuous activity completed to stimulate sales
  6. If you must run a promotion make sure that it is different to your competitors.  A promotion that is exclusive to you has the chance of achieving results. A promotion that is exactly the same as your competitors is dumb
  7. There should be clear metrics in place to measure both the promotional sales and the impact on the brand health
smarter price promotions the importance of price
The Importance Of Price In The Sales Process blue dolphin

The Three Smart Promotional Elements

  1. Genuinely helps the customer save money
  2. Provides the customer with information and helps them think
  3. Positively interacts with the customers emotion

Three examples of Smart promotions


  • The promotion is the starting point – i.e. the more that buy from a collective buying perspective the lower the price
  • The actual rationale is that the promotion is a great mechanism to get qualified leads and build a series of lists

MyZone Phone Network

  • Allows you to save time if call at a certain time
  • They use promotion to get a better price but also change calling behaviour

Pay Your Age

  • During the London olympics for ticketing a price promotion existed for under 16’s in that you paid your age for the ticket
  • Free tickets were offered to schools if they increased sporting participation

Seven Points To Consider For Smarter Price Promotions

Price promotions are easy to copy. Don’t become addicted to continual price and offer promotions that don’t do anything other than losing you margin. Promotion should be considered as a way to get attention. Think about it from the perspective of have a promotion to buy and …..

Effective Pricing What Does Its Too Expensive Really Mean?

Some thoughts on the complex and emotional issue of pricing

For many though “It’s too expensive,” almost never means, “there isn’t enough money if I think it’s worth it.”
This is often demonstrated by those who even when they are at the bottom of the poverty ladder, many people find a way to pay for the things they value i.e. mobile telephone
How does its too expensive relate in the B2B sector. If an investment is going to pay for itself, “it’s too expensive,” rarely means, “the company can’t afford it.” Often, it actually means, “it’s not worth it.” This is a totally different analysis, of course. Lots of things aren’t worth it, at least to you, right now in your current circumstances. When you hear a potential customer say, “it’s too expensive,” what you’re really hearing is something quite specific. A £400 bottle of wine is too expensive to most, even to people with more than £500 in the bank. They have the cash, but they sure don’t want to spend it, not on something they think is worth less than it costs.

Not All Customers Are Equal

Not everyone will value your offering the same, so if you wait for no one to say, “it’s too expensive” before you go to market, you will never go to market. The challenge isn’t in pleasing everyone, it’s in finding the few who see the value (and thus the bargain) in what’s on offer.
Culturally, we create boundaries for what something is worth. A bottle of water from the supermarket costs £0.50 and it’s drinkable. The same water at a music festival in the summer would be seen as a bargain for ten times as much money. So obviously, we’re not discussing the ability to pay nor are we considering the absolute value of a bottle of water No, it’s about our expectation of what people like us pay for something like that. The expression that I often use is Perceived User Value PUV.

Effective Pricing What Does Its Too Expensive Really Mean?

If you are struggling with pricing and identifying your product or service pricing click here

the importance of pricing what does expensive really mean - how much would you pay if you were desperate to dock
Should You Put Prices On Your Website priced plate Blue Dolphin Business Development website design peterborough

Lets Reduce Prices By 5% – How Will That Affect Your Profitability

The Financial Implication Of Discounting.

We are lucky to visit and work with a wide range of customers. One of the critical issues that always comes up in strategy discussions is the pricing. For many companies they believe that  they need to be the cheapest in order to win the business. As part of the pricing discussion ‘Promotional Pricing Discounting’ is reviewed and we are always amazed at the misunderstanding that takes place when you discuss the implications to the business of offering pure price discounting.

For more information and benefit from Government Funding

If you would like more information on pricing for profit, or would benefit from a strategic pricing review please give me a call. New government grant funding means that many businesses are now eligible to get significant levels of funding to pay towards strategic business development activities.

So I guess that’s a discount worth making use of please call Andrew Goode on 01733 361729 or email if you would like more information.

With thanks to Durham Business School who demonstrated this matrix to me very many years ago, when I was doing some work with them. I hope you find it as useful as I have. Note this is an abbreviated matrix it is available for every single Gross profit percentage and percentage discount.

“OK Lets Reduce Prices By 5%” – How Will That Affect Your Profitability

For more information on marketing and sales click here

Product Positioning – The Marketing Definition

Product positioning is an important element of sales and marketing and is the process used to determine how to best communicate their products’ attributes to their target customers based on customer needs, competitive pressures, available communication channels and carefully crafted key messages.
Effective product positioning ensures that marketing messages resonate with target consumers and compel them to take action.

Product positioning a recent great example

For me the Forestry Commission got it absolutely perfect when they ran a promotional event which featured the Gruffalo. Since becoming dog owners almost 2 years ago taking the dog for a walk in the woods has become a weekly outing. So as fifty year old, miniature schnauzer  owners the woods have just become a destination to walk the dog. Without the dog it is very unlikely that we would visit the woods.
So when the other week we took the grandchildren to the woods imagine our surprise and delight when we encountered a real life Gruffalo

Why it worked for me

  • For those who have read the Gruffalo (if not its a great read irrespective of whether you have young children) the story could have been set in these woods
  • The match was perfect and targeted a new audience (those who enjoyed the character) to come to the woods.
  • For many going to the woods could be seen as a one off activity, the Gruffalo provided a perfect reason to revisit
  • The woods are an area for exploration, observation and activity. The Gruffalo walk combined all three of these beautifully.
    • A specific nature trail had been created with Gruffalo signage (to encourage Gruffalo type activities), so find the next sign , activity etc
    • The grand finale of arriving at a full size Gruffalo – see the image where I thankfully managed to sneak up on the creature
    • All in all perfect execution and great experience for both brands

Product Positioning A Recent Horror Example

At a recent business event I was talking to a salesperson of a very well known automotive brand. During a conversation as to who were their major competitors a number of well known and developing brands were discussed. Which led to the question “So in a competitive sector why would I choose your brand?” to which the answer came

“People choose our vehicles because they are fairly anonymous”

Now I might be missing something but positioning your product to be anonymous was a new one to me. I certainly up until this point had never come across a person who chose a car based on being anonymous!

the importance of correct product pricing blue dolphin
The Importance Of Price blue dolphin

The Importance Of Price In The Sales Process

Increasing your prices can have several benefits over discounting, including:

  1. Increased profitability: When you increase your prices, you earn more revenue per sale, which can lead to increased profitability. This is particularly important if you have high fixed costs or if you want to invest more in your business.
  2. Perceived value: Higher prices can create the perception that your product or service is of higher quality or more exclusive. This can help attract customers who are willing to pay a premium for premium offerings.
  3. Brand positioning: Increasing your prices can help position your brand as a premium or luxury brand. This can help differentiate your business from competitors and attract customers who are looking for high-quality, premium offerings.
  4. Reduced discounting: Increasing your prices can reduce the need for discounting, which can erode your margins and undermine the perceived value of your products or services. By setting higher prices, you can avoid the need for frequent discounts, which can help maintain the perceived value of your offerings.
  5. Improved customer relationships: When you increase your prices, you can invest more in your products, services, and customer experience. This can help build stronger relationships with your customers and improve their loyalty over time.

If you would like to know more about Pricing Strategy contact Andrew Goode MBA, MSc, FCIM Click here to arrange a call

Other articles linked with marketing metrics that may provide additional insight. Marketing metrics and analyticsmarketing ROI Planning , marketing revenue analytics and Marketing Measurement Metrics and Website Design

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