Why do people buy on price only?

[SDI 14]

I would like to hear from you out there as to the reason you think people buy on price?

BOB V.

SDI

[yazbird8 17]

Because "Perception is reality". If you were offered what You perceived to be the identical candy bar from three different people, and the price range was 50 cents, 75 cents and $1 which one do you buy.........I'm jumping on the 50 cents candy bar..............You need to convince your customer that your candy bar is best...............SELL QUALITY.......................Sell Godiva, not Hersheys............That might be a bad analogy, since I like Hersheys better........

Stephen Andrews

POWER WASHING

HOME & PROPERTY

CARE & MAINTAINENCE

[tunatussle 14]

They must be educated in order to make a wise decision on how to spend their money and get the most for what they spend. It is your job to educate them as to why a pricier job is better in the long run than having a low baller just show up and take their money.

As the above reference points out the 50 cent bar would appear to be the choice but the 50 cent bar may use a lower grade chocolate.

[Dave O 15]

Because most only sell price, and not on what they should be selling.

[Ron Musgraves 240]

Lack of educating the customer on your Scope and competitors scope of work. its that simple, any smart business person can be made to understand.

You cannot do anything about stupid people.

[CCPC 26]

Because most only sell price, and not on what they should be selling.

Dave hit on the nail. Years of training by all areas of a persons day to day purchasing has resulted in a mantality that cheaper is better, without much other considerations. I would bet that most here have been guilty of this in the past. I know that before I got into a service business such as this, I based my decions for hiring a contractor more than I should have on soley on price.

[SDI 14]

I want to thank those who have taken time to answer the post,we all know what we need in oder to help sell the job what I wanted to know is why you think the people buy on price.

here is something you may find interesting.

I was wondering why people buy things - things like new cars and expensive clothes and, yes, even SEGWAY HT's?

It ranges from things I need - food, shelter - to things I want like a newer car, stylish clothes and even SEGWAY HT's.

I ran across this. While it is primarily focused on Business Related Decisions there are implications for Personal Choices as well:

WHY DO PEOPLE BUY?

Five decisions or levels of buying:

1. The NEED to be fulfilled

2. The PRODUCT to fill the need

3. The SOURCE for the product

4. The PRICE to be paid

5. The TIME to buy

All are RATIONAL CONCERNS, yet, only 10% of sales or buying are on Rational Levels.

The PRIMARY concern is almost always rational – something the prospect thinks out, analyses, weighs or measures.

DOMIMANT buying is almost always emotional. Ninety percent of the time it is beneath the surface, an underlying need or desire.

How often is a buyer subconsciously motivated by a desire to make a buying decision based not only on getting a good product at a good price, but also, “If this will lower costs, my department will look good. Will I get an “attaboy?” Will my need to worry be reduced? Will I be comfortable with this buy?”

WIIFM - What is in it for me?[/red]

Three Underlying Fears of Buying

1. Will the product do what the salesman says it will do?Will I be caught with egg on my face if it won’t? How does this decision to buy this product reflect on my judgment, my job, and my peace of mind?

2. Fear that the price is wrong.

Not worth the price, available at less cost somewhere else. Will I be praised or put down for paying too much or too little for the quality to do the job? Will I suffer Buyers Remorse later if there are Price Drops elsewhere?

3. Fear that others will not approve the purchase.

Doubt may be cast upon my judgment, my standards, my motivation, my suitability to continue in my position.

Motives for Buying

People do not buy products or services as much as they buy Benefits – Facts translated into Human Values. From the Rational to the Emotional. Move from the WHAT - the FACTS/Logic - to the So What? (The BENEFITS – WIIFM?)

It is important to remember: Buying Motives are NOT the Reasons to Buy; they are the reasons behind the reasons.

Look at the emotionally charged Fears of Buying:

1. Fear that the Product will not do what it is supposed to do. The objection is that the Credibility of the seller is at question. Will my new SEGWAy last as long, go as far, be as dependable, provide the bebefits I expected before I boought one?

CREDIBILITY: The weight given to assertions of an individual and the acceptance given by the listener.

Overcome doubts by showing how IT has worked for others whom the buyer trusts and admires – referent credibility.

A. Factors in Credibility

1) EXPERTNESS. The extent to which you are perceived to be a valid source of information.

This includes Knowledge of the subject; understanding of the questions posed; position held; similarity of background; have information to share; have accuracy in describing product features and benefits; relational intelligence and establish an interpersonal relationship.

2) TRUSTWORTHYNESS: Confidence in your intent to communicate sound and valid assertions.

A Yale University study showed that persuasion is up to four (4) times more likely if credibility is present.

What can Destroy Credibility?

1. You are perceived to have selfish or personal motivations.

2. Manipulative Methods are used in the presentation.

i. Telling Lies – making specious promises

ii. Deliberately omitting certain facts

iii. Inconsistency or Inaccuracy

iv. Lack of Group Identity

Remember: What the customer thinks is true, is true - to him.

2. Fear that the price is wrong. This is not Really a factor. Women will buy anything if it is half price and men will pay twice the price if it is something they want badly enough.

Price concerns usually fall into one of these three categories:

Do I really need to pay this much?

Is this the price I expected to pay?

I don’t think I can afford it.

[red]3. Fear of what OTHERS will think (of his decision to buy.)

Will the people whose positive opinion I seek, be in agreement with my decision to buy? My boss, My spouse and family, my co-workers, my employees?

[Beth n Rod 1,279]

Bob,

Thank you for a wonderful post!!!! :sunshine: :dancing:

Beth

[Barry M 73]

If your targeting the right audience, price is only about 8% of the decision in buying a service or product.

What people really buy

They buy benefits

They buy promises you make

They buy your credibility

They buy solutions to their problems

They buy you and your employees

They buy other people's opinion of your biz

They buy your guarantee

They buy expectations

They buy believable claims

They buy hope

Confidence in your business is the number 1 determinant in influencing sales.

Quality in your product or service is number 2.

If people are buying strictly on price I move on, because they aren't going to be loyal to my company anyway. They are price shoppers and probably found my company in the yellow pages and want something for nothing. I do not target these kind of people, they are not my customers.

[Beth n Rod 1,279]

Here are some of the reasons why people buy from us and this is just to add to the list others have presented which are great.

People buy our services because they:

1.) Are physically incapable of doing it themselves

2.) Are unwilling to do it themselves

3.) Do not know how to do it themselves

4.) Do know how but don't have the time to do it themselves

5.) Have the money and would rather pay someone else to do it.

Time, personal freedoms, sacrifice, obligations, pride and loss are all part of the reasons supporting variables behind the buying process.

-Time is a valuable commodity which in terms of money is what our lives evolve around and what we are trying to save the most of for ourselves. Yes we are trying to save money as well but the time we have not associated with a time-clock are what we prize the most.

-Personal freedoms are the result of time saved and wise use of time otherwise proportioned to life's obligations and sacrifices. Personal freedoms represent the accomplishment of a goal we set for ourselves and cannot be measured with time or money but the pleasure we derive from them.

-Sacrifice is the action we perform where our time is concerned, giving up a major portion of it in exchange of money. Money we use to buy with. It is at a personal expense that we attain it and it comes with pain to give it up when we buy because we know that we must give up more of our time to replace what we have spent. It's that anguish most people feel when paying all those monthly bills because they subconsciously realize the sacrifices they are making to maintain the status quo they have created for themselves and grown comfortable within.

-Obligations come from the predefined agreements we make when buying something (maintenance) and outside pressures to conform to those obligations (H.O.A's etc...)

-Pride is in the perception we wish others to have about ourselves in ways which influences what we buy and how often. Those with the money can afford to show it but also may not want to part with much of it.

-Loss is the fear supporting the buying we do which in relation to the sacrifice is a significant factor. People fear the loss of value (money), the loss of money (time) and so look for the most they can get with what they buy. They want a return on investment, a reward for their efforts, something that makes them feel good about what they are doing otherwise it can represent a loss in some way however so small...a loss is still a loss.

Rod!~

[SDI 14]

Those of you who have seen this post now have some what of an good ideal of what to say or write in your next presentation. I hope it has given you some insigth on dealing with customers. just remember one thing, Don't let your company spent to much time on selling its self and working for the bottom line that you forget about the customer.work on the customer they will bring the money.

And now some information on THE PSYCHOLOGY OF SALES AND MARKETING.

Why People Buy: The Psychology Of Sales And Marketing

by Marketing Basics

© 2005

Did you know that when people make a purchase, they generally buy " with their emotions and then justify their decision with logic later " on?

What? You didn't know that? If you truly want to succeed in " business, you need to learn and understand how using psychology can " set you apart from the rest of your competition and take your " business to the next level.

Psychology can be applied to all aspects of your sales and " marketing efforts and will give you that all important "edge" over " your competitors.

When you write an ad or sales letter, seek first to " understand, then to be understood. In other words, first " strive to understand what's going on in the readers mind, " and attempt to allay any fears or doubts.

When you do this, the reader will have the perception that you " understand and care about him and he in turn will begin to care " about and understand you--thus greatly increasing your chances for " making the sale.

People desperately want to feel cared for and understood more than " anything else, and the businesses that understand this vital " pyschological factor will gain a major advantage over their " competitors.

Also, when writing your marketing materials, bear in mind, people " respond more to what they are going to lose than to what they are " going to gain. It's called "fear of loss."

Ask yourself: What will my customers stand to lose if they " do not buy my product or service?

In your sales letter, mention to your readers that it will only take " a few minutes, to show them how they can benefit from what you're " offering. This will mentally slow them down and partially alleviate " any hesitation on their part.

In addition, reward them for taking the time to read your letter. " Offer to give them a free gift. For example: free reports or gift " certificates work extremely well as freebies. Why? Because they're " low-cost with a perceived high value--and perception is reality." " Did you know you can increase your sales by using pictures of " attractive people using your product or service? It's true.

Why is this? Well, first of all, it humanizes your product or " service and prospects perceive you to be more professional and " trustworthy. Again, perception is reality.

Secondly, people like looking at attractive people. Big business has " known this for years. Just look at how attractive those people are " in magazine ads and on television commercials.

You can also use this knowledge to your advantage on your business " cards, brochures and website. This is especially true for small "mom " and pop" businesses. If you're reasonably attractive, always include " your photo on your website and marketing materials.

The reverse also holds true. If you're not attractive, you're better " off not using a picture. You risk losing customers and turning " people off. The same rule applies if you're a minority. You're " better off not using your picture, regardless of how attractive you " are.

Why? Unfortunately, we still live in a world where people have " prejudices. That's just the way it is. You don't want to lose sales " because someone has a problem with your nationality or the color of " your skin or the shape of your eyes. Please don't misunderstand what " I'm saying. I'm not suggesting that this happens a lot--but it does " happen. Why take the chance.

No matter what type of business you have, in your marketing " materials you MUST sell benefits, not features. People only care " about one thing, "what's in it for me?"

A feature is a characteristic of your product or service. A benefit " is what that feature does for a customer. Here are a couple examples " of features and benefits:

Feature:

At Consolidated Bank, there's NEVER a charge for using " other bank's ATMs.

Benefits:

You can get cash wherever you are, when you need it, and " save money.

Feature:

At ABC Employment Service, we test applicants office " skills, such as typing speed.

Benefits:

When we send you an applicant, they meet your minimum " requirements, and you don't have to waste valuable time testing them " yourself.

Here's a little trick for finding the benefit within the feature. " List a feature then ask yourself, "So what?" What does that feature " do for my customers? For example:

Feature:

Personalized service.

Benefit:

The benefit of our personalized service is that we take the " time to understand your needs."

Don't stop there. So what? What does working with people who take " the time to understand their customers needs do for your customers?

Benefit: Since we take the time to understand your needs, we can " better anticipate potential problems and save you time, money and " aggravation.

Bingo! Almost everyone likes to save time and money, and less " aggravation is always good, so this is a real benefit statement.

Benefits Categories:

Though benefits can be described in a million ways, there are really " only five main categories:

1. Convenience: Saves time or effort.

2. Saves money or increases money.

3. Provides peace of mind.

4. Appeals to image or ego.

5. Fun or enjoyment.

In addition, one single feature can have lots of benefits to one " customer. Benefit statements don't necessarily have to include one " feature and one benefit, each.

Also, keep in mind, just like beauty is in the eye of the beholder, " so too are benefits. One person might buy an SUV because he needs " room to transport five kids; another person buys the same SUV " because she likes the comfortable ride and enjoys sitting up high " overlooking other cars.

Another powerful psychological strategy is using " a technique that appears to lower the price of your product or " service, without actually doing so.

For example, if you charge $1000 per year for your product or " service, you can break it down for the reader so that they " understand it's really only $19.23 per week." It's the " exact same price, however, $19.23 per week is a lot easier to " psychologically digest and justify than $1000.

[Barry M 73]

I agree with many statements in that article, thank you for posting that. I see you've really been doing some good research Bob. I often go to the library and read articles in Pyschology Today Magazine. Learning about human behavior is an advantage in marketing to people.

The fact is people do not care about your company or your service, and they don't want to read about it on a postcard or flyer. What they do care about is themselves and their problems.

Here are two examples of describing a product.

Example 1

"Over one thousand photovoltaic cells turn light into electricity in this unit."

Example2

"This solar heating system can save you $188 per month based upon your current use of energy."

See how the second example is about whoever is reading it by referring to "you". That will suck them right into the rest of the ad much better than the first example. Another good tactic is to ask a question which hits upon a problem they may have. Like "Do you have black streaks on your roof?" And then give them the solution to the problem.

View things thru your prospects eyes and watch your profits rise.

[PressurePros 249]

When I trained a salesman for Tweeter our protocol relied heavily on FAB statements. Feature, Advantage, Benefit. These have more recently been shortened to F-B statements. Sometimes it helps to look at what people consider benefits and backtrack. Some big ones are time and money. Many salesman confuse the money benefit with having to lower price. How about trying this?

Feature: PressurePros, Inc uses the highest quality, contractor-grade wood sealants.

Benefit: You save money by not having to have your deck redone every single year.

(time)

Feature: PressurePros, Inc sets itself apart with promptness, attention to detail and customer service.

Benefit: You won't have to sit at home and wait for us to arrive or worry that the job will not be done correctly.

This is a great post.

[CCPC 26]

Secondly, people like looking at attractive people. Big business has " known this for years. Just look at how attractive those people are " in magazine ads and on television commercials.

You can also use this knowledge to your advantage on your business " cards, brochures and website. This is especially true for small "mom " and pop" businesses. If you're reasonably attractive, always include " your photo on your website and marketing materials.

The reverse also holds true. If you're not attractive, you're better " off not using a picture. You risk losing customers and turning " people off.

So true. maybe that's why I'm so good a selling! :banana: :dance: :lgkick:

[JFife 14]

So true. maybe that's why I'm so good a selling! :banana: :dance: :lgkick:

Lance,

.....so you must be the one with long hair in your avatar, :)

[JFife 14]

Ken made a profound comment in another post that I liked.

"People only buy on price when they have nothing else on which to base their decision."

I see this broken down further. Not so much "price per the job" as "profit per the specs of the job". What I mean is, if you are going to charge high-end prices, you have to provide high-end service, at high-end quality. That is usually fairly easy to sell.

What is harder to sell is, "Company A and Company B both providing the EXACT same services specs (strip, brighten, stain with TWP a deck), but one companies bid is $700 and yours is $900." We all know this happens--the annoying problem of someone willing to work for a lower hourly rate/wage/job than you are. Their quality is good, provide good service, etc., and they are just cheaper.

If you don't face this yet, it will head this direction. Look at more evolved but related industries such as hood cleaning. There are good, smaller Companies out there doing good work, and there are monster Companies out there doing good work as well, at significantly lower prices. They can afford to.

A better question is how to deal with this type of sale.

[Jarrod 22]

That will be kinda hard. Now you would almost look like a gouger to some people.

[JFife 14]

umm, not really. Kinda the "Walmart" problem on a micro-scale. Is it gouging if you feel you are worth $40 an hour and are happy making that, and I feel I am worth $80 an hour? Hypothetically, we perform the exact same specs/quality (you should be so lucky,LOL,:)j/k). The difference being I want $900 for a job you'll do for $700.

However, you make up the difference by having 50 employees making $40 per hour on the jobs, so you actually net far more profit than I do. This is what the "mom and Pop" competes against daily with Walmart, MCdonalds, etc. Believe me, there are people in your market (everyones) that can perform the same quality as you (anyone reading) and are doing it for a lower margin. To me, this is the enemy to fight, not some hobo blasting a deck and throwing Thompson's on it for $250. Those guys come and go, and reasonable buyers aren't interested. The person that will make life hard is the guy that IS good, and can operate for lower margins than you can.

Behold, the Capitalist.

[Jarrod 22]

I agree.

To clarify, in my previous post, when I said "you" I didn't mean YOU. I was referring to the higher bidder. I don't think you are a "gouger."