Cheap = Bad Idea

It can be tempting to give in when a client beats us up over price. However, selling cheap is rarely a good idea for you or for your client. Here’s why…

Did you ever have a prospect who really worked you over on price? If you have been in this industry for any length of time, you probably had a lot more than one.

Fun, right? Not so much…

When you run into these situations, it’s tempting to cave in. It’s tempting to either cut your price or sell them what they’re asking you for… something cheap! But today, I’ll explain why that is rarely a good idea.

Why Selling Cheap is Not the Answer

When clients beat you up on price, it can be tempting to give in. Many of us in sales are people pleasers. We like making our clients happy. It’s what we do! But there are a lot of inherent problems when we give in to this temptation.

First, if we just sell them the same product at a lower price, it does a number of things, none of which are good for us long term:

  • By rewarding the behavior, it trains clients to beat us up over price.
  • It makes them think we were trying to overcharge them (because after all, if we could have charged the lower price upfront, but didn’t, then by definition we were attempting to overcharge on the first price we quoted.)
  • It forces us to cut our profit margin, which is the only part of the sale our company gets to use, to cover things like overhead, taxes, business expenses, and yes, sales commissions.

For those reasons and many more, it’s rarely a good idea to just cut your price on the same product.

However, if we give in to their pricing demands by recommending and selling them a cheap product — not just a product that is inexpensive, but a genuinely cheap product — that opens us up to an entirely different set of problems.

The difference between cheap and affordable can be enormous.

Good quality products can be affordable, but cheap products are rarely affordable in the long run because they don’t hold up.

Very often, the difference between affordable and cheap is also the difference between acceptable and unacceptable.

Let’s say your clients demand something cheap… and you get it for them. Shortly after delivery, some of the products fall apart, or the imprints rub off. The pens leak or maybe they don’t write at all.

In that scenario, do you suppose your clients will blame themselves for ordering something “cheap?” Or will they blame you for selling it to them?

The answer is pretty obvious, isn’t it? They’re going to blame you. And for good reason, because…

The products we sell represent us. The products you sell represent you.

Sell good quality products, it makes you look good. Sell cheap products, it makes you look cheap. So tempting as it might be, do what you can to resist the urge to sell cheap quality products.

One of my favorite responses to the price/quality argument was one made by author and sales trainer Zig Ziglar years ago, and it goes like this:

“Many years ago our company made a basic decision. We decided that it would be easier to explain price once than it would be to apologize for quality forever.”

Does that argument work on every prospect? No. But will it work on the type of client who actually appreciates quality and is willing to pay for it? Probably. So if that’s the type of client you’re after, the approach is clear.

Focus on providing high-quality products and services to high-quality prospects at prices that reflect the value you bring to the table.

Are you ready to stop selling cheap?

If so, check out the five primary ways we help promotional product distributors grow:

  1. Just Getting Started? If you (or someone on your team) is just getting started in promotional products sales, learn how we can help.
  2. Need Clients Now? If you’re already grounded in the essentials of promotional product sales and just need to get clients now, click here.
  3. Want EQP/Preferential Pricing? Are you an established industry veteran doing a significant volume of sales? If so, click here to get End Quantity Pricing from many of the top supplier lines in the promo industry.
  4. Time to Hire Salespeople? If you want to hire others to grow your promo sales, click here.
  5. Ready to Dominate Your Market? If you’re serious about creating top-of-mind-awareness with the very best prospects in your market, schedule a one-on-one Strategy Session here.

    3 replies to "Why Selling Cheap is a Very Bad Idea"

    • Sean McCartin

      Counterpoint: selling fewer units at a higher price is not a sustainable practice unless you can ensure in the long run that you can continue selling at that price. If you’re only going quarter-to-quarter trying to maximize your profits, you can easily miss the fact that eventually your customers are going to stop buying, either because you’ve drained their allotted budget for your product or you’ve priced yourself out of the market.

      In short, there’s a balance. Sell too low and you end up losing out on profits. Sell too high and you “milk the cow dry”, so to speak.

      • David Blaise

        While I agree there is a balance, Sean, I stand firmly behind the stated premise that selling cheap is a very bad idea. Naturally, we operate in a free market. You can sell your products and services for as little or as much as you want to. Just recognize that you can’t out-Walmart Walmart. You can’t out-Amazon Amazon. Many small businesses attempt to cut price, instead of increasing value, but they lack the financial resources to do so and they go out of business. The race to zero margin is a losing proposition for those who can’t afford to invest consistently (i.e. sell at a loss) to get new customers. It’s also important to recognize that price shoppers are generally the least loyal customers you can have. If someone else comes along and beats you by a nickel, you’re out and they’re in. My purpose in writing this is not to tell you how to set your pricing. As stated above, it’s entirely your call. Just do the math for yourself so you know what you’re getting into.

    • Howard

      Yes , after many years in this crazy biz and up and downs , we firmly believe in maintaining 40-50% gross profit margins on everything we sell!
      We may not be the largest distributor but have survived almost 50 years !

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