7 Tips to Beat a Low-Cost Provider & Win the Business Every Time

Get HubSpot's Free CRM Software
Emma Brudner
Emma Brudner



Building a business around being the cheapest option on the market isn't the smartest strategy. All it takes is one competitor that can produce and sell your product for even a dollar less, and your advantage vanishes instantly. You're then locked in a dangerous "race to the bottom," where everything holding your company back from achieving that lower price must go. You can kiss good service and cutting-edge innovation goodbye.

This makes sense from a strategic standpoint. But what about the salespeople who have to compete with low-cost offerings? Everybody likes to get a deal, and small price tags appeal to buyers looking to save a buck. Reps who sell relatively expensive products often feel that they're fighting an uphill battle.

However, it's not a lost cause. Although buyers can easily become entranced with low prices, they won't purchase a product or service that doesn't fix their problem. Salespeople who run up against low-cost competitors again and again can win the business if they successfully tie value to price -- and prove their product is more valuable. 

To beat a low-cost provider at their own game, take the following seven steps.

1) Define what "cheap" and "expensive" mean to the buyer.

"Expensive" is a relative term. While $100 could be an exorbitant amount of money to one prospect, it could be pocket change to another.

With this in mind, try to get an understanding -- in hard dollars -- of what the prospect considers "expensive" and/or "cheap." It could be that your product is just a bit out of their price range, and a small discount could sway the buyer in your favor. On the other hand, if your product is priced drastically higher than the buyer's budget, it's probably not feasible (or wise) for them to buy from you. 

2) Ask if they have ever purchased a similar product before.

Think about the first time you bought a car. Maybe upon arriving at the lot, you walked up to the fire-red Ferrari that caught your eye right off the bat. You checked out the price tag: $250,000.

Hmmm, you thought. Is that high compared with other cars? Low? Is it a good price for the features you'd receive? Because this was your very first time purchasing a car, you had no frame of reference, and therefore, no handle on a "good" or "bad" price.

This scenario applies to all sales situations. Before delving into a price conversation, ask if the buyer has ever purchased a similar product or service before. If they haven't, they might not have a handle on how much low-quality vs. high-quality products in your category cost. Educate them on the typical price range to give them much-needed perspective and help them get the most bang for their buck.

3) Break up the cost and spell out the ROI.

Would you rather buy something that costs $7300 annually or $20 per day?

I'm willing to guess you went with $20/day. But I'll let you in on a little secret: $20 per day adds up to $7300 over the course of a year. Yup. The two figures represent the exact same price.

I use this example to illustrate the fact that massive price tags broken down into smaller chunks come off as less scary to prospects. If you're competing against a low-cost provider, consider calculating the cost of your product on a daily, weekly, monthly, or quarterly basis, and present this revised figure to your buyer.

It's also worth mentioning that the cheaper product might not bring the same ROI. Figure out the ROI of your offering in hard numbers and present your prospect with a time to payback analysis. If you're privy to your competitor's ROI, match it up with your own and create a comparison. 

4) Make the value-cost connection. 

Business leaders don't come up with prices willy-nilly. Products are priced based on the amount of value they deliver consumers. At a very basic level, the more features a product offers, and the more valuable those features are to customers, the higher the price.

In other words, price and value are inextricably linked, and salespeople who sell expensive offerings should make this fact crystal clear. Prospects who want the absolute best at the lowest price should be gently reminded that you get what you pay for. If you'd like to be a bit more aggressive, you can say "Okay -- in that case, which part don't you want?" when buyers balk at price

5) Discover and emphasize their buying criteria.

Odds are, your prospect began their search for a new product with a variety of buying criteria. Price may have been a consideration, but it probably wasn't the only consideration. Remember that prospects almost never purchase a product based on price alone, so if they're leaning towards a low-cost provider over your company, it's because they think they can get everything you're offering them for less.

Disabuse them of this notion by going through their buying criteria one by one, and explaining which tenets are satisfied by your competitor's product and which aren't. Then perform the same exercise with your product. If your offering satisfies all or more of their buying criteria, the choice will become clear and the price tag palatable.

If they don't respond to this tactic, you might ask the question "How often do you make decisions based on price alone?" This is bound to make them think, and likely reconsider their decision.  

In the unlikely circumstance that the buyer is basing their decision solely on price, abandon the deal. Your time is better spent on another opportunity with a higher likelihood of closing.

6) Present relevant case studies.

If the prospect is choosing between your offering and the low-cost provider in your space, dig up a case study that explains how another customer made their decision in the exact same situation. Why did they ultimately choose to go with your company, and not your competitor? If you don't have a case study available, try to arrange a customer reference call or email exchange. Customer referrals are often more powerful in swaying prospects than any argument a salesperson could present.

7) Stress the extras.

As mentioned above, a low price tag often comes at the expense of quality service. If you know that the low-cost vendor you're up against has poor customer service ratings or a bad post-sales experience, tell your prospect. In addition, talk up any extras you might offer that your competitor doesn't. However, don't sling mud -- stick to the facts and reveal shortcomings to ensure your prospect goes into their purchase with their eyes open, not with the intention of belittling others unduly.

The next time you're up against a low-cost provider, employ some or all of these tips to pull out a win. It can be frustrating to sell an expensive product, but "our offering costs too much" isn't a valid excuse to lose deals. A few might slip through the cracks, but you should be able to emerge victorious nine times out of 10.

And if you can't make the case for a higher price tag? You might be better off selling the competitor's product. Instead of revising your sales approach, do some job hunting instead,

Get HubSpot CRM today!

Related Articles

CRM software from startup to enterprise.


Powerful and easy-to-use sales software that drives productivity, enables customer connection, and supports growing sales orgs