Do you know the difference between cost and price?
They might sound like the same, but if you are in front of a customer (or prospect) and they give you the price objection, you need to be able to tell the difference.
Price
This is the actual figure in pounds (or your currency of choice)
It can also include the payment terms (i.e. how long it takes to get paid) and also any discounts.
Price is normally pretty easy to work out. For example, your package costs £1000
Cost
This is what it costs the customer in terms of time, effort and resources to implement your solution.
So for example, think of flat pack furniture – it may be cheaper than ready made furniture, but how long does it take you to assemble? Do you need to buy any other equipment to do it? Do you need to learn new skills?
So for example the costs of your £1000 package might be bumped up (say) by the addition of:
Labour: £150
Extra equipment £50
Time taken to learn something new/cost of paying someone to train you £50
Making a total of £250
In this example, the price of your item might be £1000 but the total cost of implementation to the customer is now £1250.
Can you justify that? Do the benefits outweigh the total costs?
So whilst, you may beat your competitors on price alone, sometimes you might not be the cheaper option.
It’s a good exercise to go through from time to time.
(it can also be a great exercise to do before you buy that next set of flatpack as well!)