Losing on Price and Confirmation Bias

Anthony Iannarino
Post by Anthony Iannarino
September 17, 2010

The evidence is there, if you look for it.

A few days ago I wrote a post entitled The Most Dangerous Lie Salespeople Tell Themselves. That post received a number of responses in LinkedIn discussion groups. One of the responses insisted that I was incorrect and that market conditions now dictate that you compete on price. The comment was left by a salesperson that lost a deal the very same day I posted.

The commenter was in contest where four vendors competed, two priced the deal at $1,000 and two priced the deal at $600. My commenter priced the deal at $1,000. He believes that his price cost him the deal.

Pricing power is based on your ability to differentiate your offering in a way that makes a difference to your clients. The facts that he shared led me to believe that his problem was that he was not able to justify a higher price by proving that there would be far greater value created. There is a difference between price and cost. His price was higher, but his solution generated no real difference over the lower priced solution. This means his solution cost more. Had he and his solution generated, say, $500 more in value, his offering would have been a lower cost.

Seek and Ye Shall Find

These are difficult issues, and they are never, ever easy. But as much as I disagree with the commenter that market conditions mean that you should sell price (if that isn’t your company’s chosen strategy in better market conditions), I am more troubled by his later comments suggesting that if you look, you can find all the evidence that you need to see that your prospects are cutting costs and that you must sell price to win their business.

This is exactly the lie that I was writing about in my original post. I have seen too many salespeople tell themselves that they only lost the deal because their price wasn’t low enough, absolving themselves of having to do the heavy lifting of creating enough value to make their offer win on cost by creating far more value—even at a higher price.

What drives this belief? In the case of this commenter and many other salespeople, this is the result of confirmation bias. Confirmation bias occurs when you believe something and your brain seeks out information that confirms that belief, ignoring any facts that may weaken your belief. Confirmation biases are so powerful, sometimes your brain experiences a scotoma and you literally can’t see something that is right in front of you and visible to your eyes.

Is there evidence that some companies are still doing everything in their power to cut their costs? Is there evidence that many companies are sitting on a pile of cash waiting for the economic uncertainty to subside? Is it still a difficult time for many companies and millions of individuals? The answer to all of these questions is affirmative.

If all you look for is the negative facts that prove that price is the only consideration for your prospects, it is certain that this is what you will find. But the truth of the matter is that many companies are having record-shattering years. Some companies are growing, expanding their business, and investing in infrastructure.

For all of the negativity, the United States is still a 14+ trillion dollar economy. China is number two at a mere 5 trillion. There are a lot of sales made in a 14 trillion dollar economy, many that have nothing to do with price. All that having something to do with cost.

What you believe is your reality. And your beliefs determine your results.

Price Is Always Considered

Price is always going to be a consideration. For some of your dream clients, it will be the determining factor. But it will not be the deciding factor for all of them—or even most of them.

All things being equal, price will be weighed heavily. In sales, it is your job to make all things unequal. It is your job to differentiate yourself and your offering in a way that makes you the greatest value. It is your job to shift the weight from price to cost. This isn’t ever easy, in good times or in bad. But it is the mark of a professional and it the definition of a consultative salesperson.

I have never, nor would I, ever suggest that a company or a salesperson ignore market conditions. Equally, I would never ignore the fact that winning deals on something other than price requires that you differentiate your offering in way that the differences make a difference. In good times–and in tough economic times–many of your dream clients have serious business challenges and serious business opportunities that you and your solution can improve. If you can create value in excess of your price, you can win deals at a higher price (and a lower cost) than your competitors. If your competitors can generate the same or better results at a lower price, you will lose more deals price.

What you believe will be your reality. If you believe that in challenging conditions that you can only sell price, you will certainly find evidence to support your beliefs. If you believe that your dream clients are only concerned with price, then that will be your reality.

But the truth of the matter is that the real problem is that you don’t have a differentiating strategy that allows you to create greater results for your clients in excess of your higher price. It is a hard truth, but believing a lie that absolves you from having to work as hard as you have to work not to sell price, doesn’t make the truth go away—and it doesn’t keep you from losing on price.


1. What do you have to do to be able to differentiate your offering from your competitor’s? How do the differences make a difference for your client? What about you and your differences allows your dream client to generate a return in excess of what they could get from your lower priced competitors?

2. What are you going to do to deal with your confirmation bias?

3. Price is always going to be a consideration. How do you avoid deals where price is really the overriding consideration? How do mercilessly qualify your dream clients so that you are spending your time with prospective clients who will recognize and value the greater value you create?

4. Who do you have to be to face the truth and believe what you need to believe, to learn what you need to learn, to take the actions you need to take, and to really make consultative sales?

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Sales 2010
Post by Anthony Iannarino on September 17, 2010
Anthony Iannarino
Anthony Iannarino is a writer, an author of four books on the modern sales approach, an international speaker, and an entrepreneur. Anthony posts here daily.
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