LOWER VOLUME + LOWER PROFITS = DISASTER

by Grant Cardone on April 3, 2008 | Articles

Price is always a very sensitive issue, especially during times of contraction when money is tight; consumers are scared and more selective with their money. The first response (incorrectly) is to reduce price in order to make up for less volume.  It is a myth that a lower price will sell your product and in fact, a formula for disaster and guarantee of failure for most.

Unless you are Wal-Mart or the Dollar Store, who have their entire business models built around very small margins and high volumes, the lowest price model will fail the individual and the company.  Selling by price is an indication of a weak-minded and poorly trained individual or organization that looks for squirrel-like solutions to their challenges.  I can show you an almost endless list of companies that have used the lowest price model that have filed for bankruptcy or closed their doors this year alone!

Do the math- Lower Volumes + Lower Profits = DISASTER.  If you reduce price 50% you would have to sell twice as much product to be even, which during a period of economic contraction replacing loss volume would be more difficult than just learning the skill of holding price.

“A lower price will NOT solve your problems and could actually reduce the perceived value in your product. “ -Grant Cardone

Know that the public is being conditioned to believe that things are tight and they will be more selective with their purchases.  That means they will not just be shopping you against similar products but also unlike products. “Do we buy a car or redo the kitchen?”   In this case lowering your price will have nothing to do with their decision and only building value will.

RULE: MONEY MOVES TO VALUE, NEVER THE LOWEST PRICE!

If not completely sold on the value proposition of your product or service, the prospect will elect do something else with his/her money!  (By the way, doing nothing is doing something else.)

If you don’t know that the lower price/lower volume formula is a recipe for disaster you and your people will believe it (incorrectly) to be an option.  Also, during periods of contraction experience is worthless and skills are everything! The ability to sell your product and justify the price by really building value, selling yourself, your company and creating a true value proposition is more valuable than experience.

Get yourself and your staff thoroughly handled on the fact that lower price and lower volumes is a formula for disaster. Check out my book and audio program Sell to Survive, where there is an entire chapter dedicated to this topic of the price myth and how it is a destructive.

It costs less money to train people than it costs to give your product away, especially since lowering price doesn’t guarantee a sale and won’t make up for the reduction in volume. So do the math, and avoid disaster in your business!

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Grant is an international sales expert, sales trainer, motivational speaker and best selling author whose programs have positively affected thousands of people and organizations worldwide. His unique, commen-sense approach is practical and solution oriented. His humor, wit and infectious energy allow him to connect with any audience. Click here to browse books, and audio training programs by Grant Cardone.

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