This came up in another thread.
Understanding the power of "value"-- what someone else is willing to pay-- was one of the most important things I ever learned in business.
I discovered the power of "VALUE" in my first sales job.
I sold hifi gear back in the late 1970s/early 1980s.
All the stereo equipment back then was silver faced.
We got our first black cassette deck in-- w/flouroscan meters, no less (everyone else had VU meters-- those old fashioned needles that pivoted/jumped w/the sound).
This cassette deck cost us $117.50. Or something like that.
I sold them all day for $159.
Then, one day, I put a price tag of $295 on it.
My boss said, "What are you doing?!"
I said "This is the only black cassette deck in the store. Guys think it looks cool. It also has faster meters on it-- which is great for making better tapes. It also has the newest Dolby noise reduction for CrO2 tapes-- hardly anyone else has that. NO ONE makes a cassette deck like this."
Boss: "So what're you gonna do? Sell these suckers for 300 bucks?"
I smile. "Nope. But I want to see what happens when I offer a discount."
For the next few months, we sold those decks-- TONS of them (it was a college town), for $199-249 each.
Everyone felt like they got a deal-- and THEY DID-- because for them, the VALUE of the cassette deck was there.
I made buckets of money (we were paid a percentage of profit).
This became my model for working at those stores, back then. I sold the highest margin items-- figured out how to upsell them over everything else.
I did half the work (half the sales volume), but made MORE money-- since my profit margin was over 50% (most of the other employees had margins less than 25%).
I sold cheaper turntables (low profit margin) with the best needles/cartridges (insanely high profit margin)
I sold small receivers (low profit margin) with more expensive speakers (MUCH higher profit margin).
If someone gave me $500, or $1000 budget, I'd put a great system together for them-- but the cost of the equipment was almost HALF of what some of the other salesman were selling.
I was selling VALUE.
They were selling PRICE.
I was educating my customers and showing them why they needed better speakers, etc.
The other salesman were just going over to what was on sale (w/next to no profit margin) and selling those things.
The moral of the story?
People will pay you what they think something is WORTH. That's what VALUE is all about.
Find a product that costs you little-- but people perceive it as being worth MUCH MORE, and you will make money.
-Russ H.
__________________
Understanding the power of "value"-- what someone else is willing to pay-- was one of the most important things I ever learned in business.
I discovered the power of "VALUE" in my first sales job.
I sold hifi gear back in the late 1970s/early 1980s.
All the stereo equipment back then was silver faced.
We got our first black cassette deck in-- w/flouroscan meters, no less (everyone else had VU meters-- those old fashioned needles that pivoted/jumped w/the sound).
This cassette deck cost us $117.50. Or something like that.
I sold them all day for $159.
Then, one day, I put a price tag of $295 on it.
My boss said, "What are you doing?!"
I said "This is the only black cassette deck in the store. Guys think it looks cool. It also has faster meters on it-- which is great for making better tapes. It also has the newest Dolby noise reduction for CrO2 tapes-- hardly anyone else has that. NO ONE makes a cassette deck like this."
Boss: "So what're you gonna do? Sell these suckers for 300 bucks?"
I smile. "Nope. But I want to see what happens when I offer a discount."
For the next few months, we sold those decks-- TONS of them (it was a college town), for $199-249 each.
Everyone felt like they got a deal-- and THEY DID-- because for them, the VALUE of the cassette deck was there.
I made buckets of money (we were paid a percentage of profit).
This became my model for working at those stores, back then. I sold the highest margin items-- figured out how to upsell them over everything else.
I did half the work (half the sales volume), but made MORE money-- since my profit margin was over 50% (most of the other employees had margins less than 25%).
I sold cheaper turntables (low profit margin) with the best needles/cartridges (insanely high profit margin)
I sold small receivers (low profit margin) with more expensive speakers (MUCH higher profit margin).
If someone gave me $500, or $1000 budget, I'd put a great system together for them-- but the cost of the equipment was almost HALF of what some of the other salesman were selling.
I was selling VALUE.
They were selling PRICE.
I was educating my customers and showing them why they needed better speakers, etc.
The other salesman were just going over to what was on sale (w/next to no profit margin) and selling those things.
The moral of the story?
People will pay you what they think something is WORTH. That's what VALUE is all about.
Find a product that costs you little-- but people perceive it as being worth MUCH MORE, and you will make money.
-Russ H.
__________________
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