Tom Cook

Submitted by Bob Dodds

There has been a lot of discussion concerning what is the proper price for a particular club or service, and what an acceptable margin should be? Each discussion tries to justify what that particular clubmaker is doing with his prices and margins. They then go on to explain why they can or can not price their clubs or services at a given level.
All of us are in different locations under different circumstances, which will influence our perception of what is the perfect price or margin. My question is: "Why are we discussing price?"
Understand that no matter whether you are selling golf clubs or a club-repair service, whether you are part-time or full-time, whether working out of your basement or a store front, or whether charging $100 or $2,000 for a set of clubs, you will hear one objection more often than you'd like: "Your price is too high." Honestly, whatever you are charging, you will hear that statement. This either can be verbalized or implied by the customer.

Why Question Price?

You need to dig deeper and ask yourself: "Why do customers question the price?" The customer may be confirming that the best possible price is on the table, or in other words, negotiable. In that case, you have a strong buying signal.
But when the customer sincerely believes the price is too high, look at the objection from the customer's point of view. The customer is worried about the COST, not the price. The customer balances the value of what you are selling against the price. One way to visualize cost is to use a simple formula that compares price and value:
price divided by value equals cost
Value is the customer's total benefits, which is your solution to the customer's problems (the product or services you are selling inclusive of all benefits). Assuming the price is constant, the only thing you can change is the customer's perception of value. Using this simple formula, if your price is scaled at 100, but the perceived value is ,90, the cost is 1.11.
The solution is you must build up the perceived value to lower the cost. This is done by solving the customer's problems with your product or service, or what features you put into this product or service for the customer.

Raising the Perceived Value

The same formula shows that when the perception of the value goes up to 110, the product's cost goes down to 0.90 [price (100) divided by value (110) equals a cost of 0.90]. Okay, the formula is simple and possibly stupid, and it, alone, won't answer the price objection, but it does show how to approach it. Of course, there is another way to bring cost down, and that is to lower the price. Isn't it more advantageous to raise the perceived value?
The question that should be asked is: "What is the perceived value of my product, and how can I raise that without lowering the price?" Or better yet: "How can I raise the perceived value and the price of my product?" Let me ask one more question: "Will the perceived value go up with a higher price?"
When you are faced with a price objection, remember:

Customers automatically make a price/value comparison to determine cost, and they will bargain instinctively.

Don't be upset by the customer wanting to bargain. Try to discover the buyer's perception of value and how to increase it in your product or service. If it is a set of clubs, talk about the fit, your ability to adjust the important elements of the club to the customer, your guarantees, etc.

You are also part of the buyer's package of values. Sell yourself as well as the product. Sell your qualifications as a club fitter, clubmaker, and of course, as an "all-around nice guy."

Buyers FEAR cheap products. If they perceive it to be cheap, they will not buy. They want to believe your clubs have high value. Help them by building up that value. Talk about the quality of the heads, shafts, grips, the fit, the guarantees, etc.

Understand that the statement, "Your price is too high," however it is said or implied, can be a buying signal. Don't get upset, and by no means do not pass up the opportunity to sell the individual.

If you are selling price - LOOK OUT! If price were the customer's only consideration, salespeople would not be needed at all. Customers would simply buy the cheapest product available. Even if the customer appears to be happy with your competition, he or she is not completely satisfied. Otherwise, you would not have this opportunity to sell your product or service.

Bottom Line: Perceived Value

Whatever you do to generate sales, the bottom line always will be perceived value. Price is not the most important part of the sale. What the person perceives as value for the price is the most important part of the sale. If you have slept through this whole article remember the last two sentences.
You must sell your product or service and its perceived value, not the price! Use a lot of thought in setting the price of your clubs, services and other items. Look at your area, your circumstances, and your customer base. That will dictate your final decision.

Strategies to Increase Perceived Value

Examples: How many pockets a particular bag has and their uses, the stainless steel from which a head is made and the advantages, etc.
Customers want to be sold! They want to see value in the products they buy. Customers are not concerned only with price; they are concerned with value. You must sell. You must sell the value of your products. When the customers see the value of your clubs compared to others, they will pay the price.
Please take time to understand the meaning of the words I have stressed throughout the article: Price, Value, Cost, and Perceived Value. Understand their meaning and understand their impact on your customer.