Operations

How To Overcome The Consumer Price Challenge

Posted on September 13, 2013 by

Page 1 of 2

“Can you do any better?” I’ve been hearing it a lot lately. After you’ve given your pitch on why your service is the best around and your price, the client asks, “Can you do any better?”

If you are like me, you are tempted to say, “For you or for me?” But we all know that will only get us dead air or a click at the other end of the phone. Blame it on the economy, but lately consumers feel the need to negotiate more and more and they expect a discount.

Savvy price shoppers
Technology has made it easy for them to shop prices. Low price alternatives are gaining in our industry, which is changing the appearance of chauffeured transportation. Consumers are willing to forego the assurances and quality of luxury pricing in order to take chances with cheaper but potentially subpar alternatives.

Why should your price even be negotiable? Do you think the airline agent on the phone hears, “Can you do any better?” Today, they might. Let’s all personally thank William Shatner and the crew at Priceline for starting this phenomenon. News and magazine stories are abundant with techniques to negotiate price from everything from retail to travel. Picture going into Macy’s and asking the sales clerk for a better price on the dress or shoes you want to buy. It may seem far-fetched but it is happening much more than you would imagine.

Put yourself in the potential client’s shoes. In his mind, he is thinking, “What is the worst that can happen if I ask for a lower price? The answer he could get is that you will say no and you will forget about him if he moves on. If he is fortunate, you will be a motivated seller who will give him a deal.

Value Vs. Discount
How do you respond to potential clients who feel the need to negotiate price? Do you negotiate or hold firm? Part of this answer depends on your business model. Let’s start with the corporate model. If you discount your service out of the gate, you are on a course for failure. Chauffeured transportation is a luxury. The alternative is not so luxurious — think taxi or shared ride. Consider explaining to the client that you do discount based on volume and will be happy to reassess the rate in 30 days after you see how many trips are taken. Depending on the client, you may want to offer a discount for the first trip to get him to try the service. The problem with this is that once a client pays a certain price, he will want that price forever. Good luck getting it up the next time.

Value-added selling only takes you so far when clients are price sensitive. You will have an easier time selling value to a CEO or Chairman of the Board than you will to a middle level manager who needs to be more cost conscious in his spending. Although taking car service will be less expensive for the company when you add the mileage and the parking, his accounting department only sees the bottom line price of his $100 ride. Savvy accounting departments understand this, but not all are savvy.

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