Cutting price is never a long-term solution for the survival of any company. It’s just a lazy way to do business. First, it won’t make up for loss volumes, and secondly, it can actually unnecessarily depreciate the value of your product. There can only be one lowest price provider in any market and you better be able to be a maniac on controlling cost which is a very precarious position particularly when inflation is in the air.
All the companies, especially luxury product companies, must now move from being market-driven to management/sales–driven. Remember, the lowest price doesn’t close the sale. It doesn’t get the luxury buyer from their home or office into your store. Also, the lowest price doesn’t ensure confidence in the consumer’s mind as they wonder about color choices, sizes, or other considerations that have nothing to do with price.
I recently was trying to buy a Cartier watch for my wife and emailed 14 stores around the country. All of them emailed me back with a price. Some discounted, some did not, yet no one made the sale. Why? Because no one got in front of me to determine that I was on the wrong watch! These companies depend on the internet while the store in Beverly Hills, less than two miles from home, had my address and phone number and could have brought me their collection.
Don’t use price to sell your products, increase the level of service. While the Cartier dealers stayed in their showrooms with too little to do and complaining about ‘mooch’ shoppers on the internet, I was buying my wife a car instead.
Price is a myth and a failed business strategy (unless you’re Walmart and control the vendors and can return the inventory). I go into detail on this “Price Myth” in my best–selling book, Sell to Survive. I promise it will change the way you think about price.
Remember, when price is a solution, your people will use it rather than doing what they need to in order to actually earn the business. Be sales–driven not market–driven and you’ll be able to close the sale, which is the only real solution for the success of any company.
Grant Cardone, International Sales Training Expert and NY Times Best–Selling Author