Your Price is way too High!

Stop price resistance and get paid more

“Stop Price Resistance and Get Paid More”. It sounds like a dream, doesn’t it? No more price complaints AND you get paid more from your customers. It can happen, but it looks a lot different than you think. It’s no surprise that grain and livestock producers are under tremendous financial stress right now. Many are operating their farms under break even. When our customers are not making money, it makes it tough for them to buy our services. So, that means those in Agribusiness are under tremendous financial stress as well. Whether you sell direct to the farm or to one of the thousands of agribusiness companies, you are going to be hit with price resistance more and more on your sales calls.

Dealing with price resistance is hard. That’s why it’s such a despised part of the sales process. However, that’s also why it is so important to master. If it was easy, everybody would be able to master it. Learning to do what’s hard will financially reward you and give peace of mind on your calls. Please understand that I am not saying that price resistance will be easy or will go away. It is part of a sale just like asking good questions and closing. Let’s learn what it looks like and how we can deal with it.

Examples of Price Resistance during a Farm Call or in Agribusiness Selling:

Elevator XYZ is paying 2 cents more!
I get free freight from my current supplier!
You’re way too high!
I can get that done for cheaper!
Do you have anything cheaper?
Yeah, but I get zero interest for 90 days from the “Other Guys”!
The Sales Person says: “We’re getting killed out there, we need to drop our prices” “Doesn’t the corporate office understand that big margins times zero sales is still zero?”
The sales manager/main office says, “We need our sales people to sell Value! Not slash prices” “Doesn’t the sales team understand that if the company doesn’t make money, they don’t make money and we can’t keep the doors open?”

Apples to Apples

The absolute first thing you have to do in a pricing game is get down to the basics of the comparison. A price resistance is a comparison to something else. Frequently however, farmers don’t always compare apples to apples. Sometimes they just don’t know how and sometimes, it’s part of their pricing game. Trust me, you will never be price competitive if you don’t get down to an equal comparison of your products or services.

Size

“How much do their 50# bags weigh these days? 40 lbs, 37.5 lbs or are they telling you that export story about sizing them in kilograms?”

After asking the question with a little sarcasm, I realized I may have offended the customer a little. I couldn’t help myself. I stood at the dealership all afternoon trying to switch dog food customers to mine. Over and over, customers would tell me my “price per bag” was too high. Mine was a 50# bag and most of the competitors had gone to a 40 or 37.5# or they were using the fairy tale about needing it to be an even 20 kg bag (44#) for the export market.

Customers often don’t do the math. So, you can do it for them in your marketing material. Show price per pound, per day or per feeding, on yours versus the competition. In the old “belly to belly” farm selling situation, you have to sort this out early in the resistance game or you are fighting an uphill battle.

Time

Another critical component specific to the Ag Industry. We are extremely seasonal. Is your price being compared to a competitor’s price in a different time frame? Again, customers sometimes don’t understand how different the price can be and may just pick the lowest quoted price to throw at you. It’s up to you to sort that out. I have also had the reverse situation. A customer truly didn’t understand. They told me my price was extremely competitive and much lower than my competitor. Knowing that I shouldn’t be that much cheaper, I dug into it with the customer. I showed him the time frame difference and how I truly compared in price. Once comparing apples to apples, my price was higher. He appreciated the honesty and I got the sale anyway.

Location

There are two components to location. The first is obviously the delivery cost. Competition spurs pricing over time to be pretty close from one to the next. However, a savvy buyer might reach out and find a supplier from outside the area. Or, a sales rep might get aggressive in growing their territory and stretch out into your market. When this happens, you need to make sure freight is included when comparing. High volume products do not tolerate a lot of freight.

The second component to location is convenience & supply. If you are 4 miles away and your customer can drop in anytime to get inventory, you have a huge advantage over the supplier that is 40, 50 or 100 miles away. Since you are that close, you are actually a warehouse for your customer.

Net-Net

At the bottom line comparison, you are trying to get down to what I often call “Net-Net”. To do this, you need to understand size, time, location, discounts, fees, rebates, added services slipped into the bill later on, etc. Frequently, when trying to make their pricing more attractive, these items are omitted. It’s up to you to know and drag it out of your customer. The more you know about your competition and how they price, the better prepared you will be.

Since price resistance is a bit more complicated than can be covered in a single blog, I’m holding a live webinar in a couple weeks. I hope you’ll join me! We have much more to cover in this crucial step on your journey to being an Ag Sales Professional!