Stop Defaulting to Discounts: How to Force a Value Trade-Off Instead
Pricing Pointers, Issue #50
To protect your margins, you need to configure your product and offer to give yourself options other than just lowering the price.
I’ve pulled together five specific tactics from my previous LinkedIn posts (similar to Substack notes) to show you how this works in practice: from pricing your “gateway” entry point to using “price fighter” versions as a negotiation buffer. Instead of cutting your price, learn how to force a trade-off between price and value so you never have to sacrifice your bottom line again.
1️⃣ Ready to transform your sales strategy and boost your bottom line?
Here’s how to turn an initial purchase into a pathway for higher margins and customer upgrades.
Step 1: Identify a gateway product. This initial purchase will drive demand for your other offerings. Think of a core item that buyers will need to begin their purchase journey.
Step 2: Select complementary products or services that enhance the gateway product. These follow-on items should provide additional value when used with the initial purchase. Consider what else a customer will need or want after buying the gateway item.
Step 3: Focus on tied complements for add-on strategies. These are follow-on products or services that have little value without the gateway product. E.g., a phone case without a phone.
Step 4: Price the gateway product attractively. Use a competitive price for the gateway product to encourage the first purchase. This can act as a lower-priced entry point for customers.
Step 5: Price follow-on products to capture additional value. These complementary items can have higher margins. Customers already invested in the gateway product may be willing to pay more for enhancements.
2️⃣ Don’t lead with your most expensive product
Don’t lead with your most expensive product. Not if you want to segment buyers by how price sensitive they are. Rather, lead with a moderately-priced product to attract the widest audience.
Then, offer high-margin supplementary products that enhance the results or experience the buyer will enjoy with your base product. Buyers with a greater willingness-to-pay will customize their purchase to fit their desires and budget. You increase sales and profits without raising the base price.
3️⃣ The only way to successfully sell add-ons (It’s not about features)
When customers decide to add a supplementary product to their purchase, they aren’t buying a set of features. They’re buying an enhanced result. That customer isn’t adding a phone case to her phone purchase; she’s adding protection and peace of mind.
If your add-ons don’t provide a genuinely better experience or result with the base product, they aren’t worth the price. The job of your sales conversation is to clearly connect your add-ons to the specific result the buyer wants to achieve. Value is defined by the buyer, so focus on their ultimate goal. What do they want to achieve or experience?
4️⃣ The “price-fighter” strategy: Use Good, Better, Best pricing as a buffer against low-cost rivals and price hagglers
Your cheapest product isn’t just for attracting bargain hunters. It’s your secret weapon against low-price competitors. The “Good” version in a Good, Better, Best strategy serves as a “price fighter.” It allows you to compete against rivals who are undercutting you on price without having to compromise the value of your higher-margin offerings.
It’s also a powerful negotiation tool. When a customer says, “I can’t afford that,” you can counter with, “I can’t give you X for that price, but I can give you Y,” guiding them to your “Good” product instead of losing the sale entirely.
5️⃣ No sale without cutting your price?
Try this approach. When a buyer asks for a lower price, offer them a less expensive version of your product or service instead. Here are three reasons why:
First, when you discount your price, you train your customers to expect a discount every time they do business with you.
Second, other customers may demand a similar discount when they find out you’ve given someone else a break on price.
Third, by offering different versions at different price points, you’re forcing your customers to trade off price and value.
The Bottom Line
You now have five ideas for protecting your margins. By shifting your focus from “how much can I cut the price?” to “how can I reconfigure the offer?”, you move from a passive seller to a strategic one. Stop viewing a price objection as a request for a discount. Instead, think of it as an invitation to offer a different level of value. Protect your margins by making the link between price and value clear in every purchase.
You now have five ideas for protecting your margins. By shifting your focus from “how much can I cut the price?” to “how can I reconfigure the offer?”, you move from a passive seller to a strategic one. Stop viewing a price objection as a request for a discount. Instead, think of it as an invitation to offer a different level of value. Protect your margins by making the link between price and value clear in every purchase.