Are you selling products that are higher priced than your competitors? Chances are good that your prospects will say “your price is too high,” “I can’t afford it,” or “that’s a lot of money.” If you have ever heard these questions, I’d like to share a story of why buying cheap is really expensive!
Buying Cheap is Really Expensive: Deals on Wheels
About 5 years ago my wife and I made a decision to buy an additional car. I set our budget to what I thought I could afford, which was $8,000. We could have spent an additional $10,000 for a new car, but I didn’t explore that option because I thought it unaffordable. After conducting a little research, we found a second hand car that met our budget and requirements and made the purchase. That was when the trouble began…
As soon as my wife drove the car out from the dealership, it stopped. She was stranded in peak hour traffic at a busy intersection, suffering insults from angry, unempathetic drivers. The dealership arranged help and fixed the problem, but this was only the first of many troubles.
Over the following weeks and years, the car continued to suffer major issues. The cost of repairs (on top of servicing) averaged $1,200/yr. A few weeks ago, the car had a major heart attack (i.e. engine failure) and now has its final resting place in the scrap yard.
Price vs. Cost
The price of the car was $8,000. Repairs totalled $6,000 over 5 years. The total cost of the car per year was $2,800.
If we had bought a new car with a $18,000 price tag, we would reasonably expect that it would last 10 years. Repairs over this period would amount to around $5,0001. The total cost of the car per year would have been $2,300.
From this example, you can see that we actually spent more on the cheaper car than if we had bought new! This calculation does not even take into account the enormous inconvenience of arranging alternate transport and additional servicing. I would have been much wiser initially to find ways to afford the new car. You could say that I couldn’t afford to buy the cheaper car!
Buying Cheap is Really Expensive: Application
Whenever a prospect raises a price issue, ask “When you say the price is too high, what do you mean?” There are numerous ways a person can answer this. If they mean that your price is higher than other options, this is your time to help them understand the difference between price and cost. You might say:
“Thank you for raising that concern, John. If I were in your situation, I’d feel the same way.”
“Let me ask you something – have you ever bought something cheap and regretted it?”
(We all have! Use their experience as a teaching tool for how important it is to consider the cost for the product over its lifetime).
“Can you see how even though our price is higher, that the lifetime cost is much lower than the alternative?”
Buying Cheap is Really Expensive: Conclusion
Buying cheap can be really expensive! Whenever your prospect brings up this issue, help them to see the difference between price and cost. You’ll be much better positioned to help them save money, time, and heart-ache in the long-run!
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