IF YOUR COMPANY ONLY SELLS WHEN YOU LOWER THE PRICE, THERE IS A STRATEGIC PROBLEM

One difficulty that every company faces, regardless of its size, is developing a clear value proposition for its business, becoming competitive in the market or segment in which it operates, and increasing sales to its target audience without the need to reduce prices.

According to Malcolm McDonald and Grant Oliver, in their book Value Propositions, two questions must be asked and answered without hesitation:

1. What are your main target markets, in order of priority?

2. In each of them, what are the sources of your company’s differential advantage?

   
   

Usually, one of these questions is answered based on the product, while the other remains unanswered most of the time.

Without having a clear differentiator — a real advantage over competitors — your company becomes just like all the others, and customers see no reason to buy from you. As McDonald and Oliver state:

“If you are in a saturated market in which your company does not stand out, all the decision to lower prices achieves is reducing your margins” (McDonald & Oliver, 2025, p. 30).

Consequently, when margins are reduced, your operating results are affected, since price always has the greatest impact on profits. When you lower prices, you need to sell more just to achieve the same result.

Although this is the strategy most companies adopt in order to generate sales, it is not the best option.

But if managers know that lowering prices harms the business, why do they still do it?

Because they do not clearly know their target markets, nor do they understand their company’s competitive advantages.

There must be a better way to make things happen — attracting customers who are willing to pay your price while perceiving real value in what they are buying.

If a customer knows that by doing business with you they will solve their problem quickly and even save money, they will certainly choose to buy from you. Otherwise, they will not.

The amount you sell is the first performance indicator that every company should monitor daily. According to McDonald and Oliver, there are four factors that impact sales performance:

1. Number of leads

2. Conversion rates

3. Average ticket value

4. Sales cycle

   
   

Marketing is primarily responsible for the first factor, while the sales team is responsible for factors two through four. By improving these variables in the sales formula, you automatically improve your company’s results.

That is why it is so important to know your numbers and work on an action plan focused on the variables that will help you reach your sales goals without needing to change prices.

Within this plan, managers can increase the number of leads, improve conversion rates through a strong value proposition, reduce the percentage of discounts and therefore sell at full price, and shorten the sales cycle (the average time it takes to close a deal), helping to forecast revenue and increase commercial efficiency.

Price reduction is an important strategic tool in commercial management, especially when aligned with the product life cycle and the company’s cash flow needs. However, it should be used strategically and not as an isolated action simply to generate sales.

The real exercise is to answer the two initial questions: what are your main target markets, and what are the sources of your company’s differential advantage?

Based on these answers, evaluate whether what your company offers is based on what you want to sell or on solving your customer’s problem.

Think, reformulate, and sell.

But sell with sustainable success and with competitive advantage.

Kelly Galvão

Commercial Management Specialist

Bibliographic Reference

McDonald, Malcolm; Oliver, Grant.Value Propositions – How to Develop Winning Value Propositions for Your Customers and Close More Deals.1st edition. São Paulo: Autêntica Business, 2025.