What if you didn’t want that extra anti-corrosion coating on your new car?
We all love our discounts. The hunt for a deal is a psychological trigger that makes us feel good buying an overpriced car for $45.000 because we got that last minute $1.000 cut. It does not really matter if it actually is a good deal, it just needs to feel like one. Giving discounts is of course a matter of trade-offs. If you are selling a complex product you probably have a certain top margin in order to be able to give a discount straight off for, let’s say, 5%. If the customer request more discount than that you may have to cut into your profit, which is not a viable option in the long run. Still, you have to sell your product to survive so you give that extra discount and hope to get it back on service agreements etc. That’s business, right? What you lose in the carousels you get back in the swings etc.
But, does it really have to be like that?
Let’s take the typical case of a car salesman who is selling a car with a pre-applied anti-corrosion coating. The production cost of it is $50 but can be sold at a ”value” of $200. If the customer is not interested in the anti-corrosion coating, the salesman could discount it to $100 or even $50 to go break-even on that extra feature. Still, if the customer doesn’t care for an anti-corrosion coating at all, it has a perceived value of $0, so they are both in a lose-lose situation. The salesman cannot remove the anti-corrosion, nor can he sell it. In order to sell the car, he has to discount the coating to $0 to match the customer’s $0 perception of value for it.
Many complex products often have this problem. You may have several amazing built-in features but some customers don’t care about them at all, and thus do not want to pay for them either. Removing these features from your product will come at a cost, so you can either just include them at a juicy discount or remove them at a cost, in order to not simply give away the feature for free. Here is one of the major benefits of having a good CPQ tool (with a stress on the P in CPQ): If the customer wants a 20% discount of the original price, you can make it into her own trade-off. So, you want a $1.000 cut on the price? Let’s remove the automatic gear box then! Oh, you do want that included? How about not adding the anti-corrosion coating and replace the mahogany interior with plastic? Great! Let’s build that car!
The deal will not be a matter of you cutting into the profit in order to close the deal. It is a matter of matching the product to exactly what the customer wants to buy, to the exact price she wants to pay for it and, most importantly, for a price that is viable for you to sell at as well! With a CPQ-tool that can match these trade-offs you will keep your customers happy while maintaining a healthy profit margin. Sounds pretty good, huh? Great! So, let’s book a meeting where I can explain more about the Tacton CPQ-tool. In fact, I can probably give you a 5% discount right away, and present a solution that matches your specific need.