Why price is irrelevant when purchasing software

If you were to look around at all the marketing in our world today, you might be inclined to think that price is all that matters to make a sale. After all, why else would our inboxes be full each morning with special offers, one-day only sales and heavily discounted items we may have been looking at online in the past week?

pricetagWe live in a world where, we, as consumers like to get good deals. But honestly, when asked, most people aren’t in it for the price.

So what are consumers looking for if isn’t the best deal?

“Of course price is important to customers, but it’s seldom the most important consideration. In fact, surveys of customers show that price is usually six or seven items down on the list of importance,” said Michael Boyette, executive editor at Rapid Learning Institute.

This trend is especially true when someone is purchasing software.

Why is price not the only factor involved?

Too Much Risk

First, not many companies who are shopping for software have the time to shop based on price alone. The majority of software companies – especially niche software companies don’t generously display their prices online.  The reason? We too know that serious clients aren’t purchasing on price alone because there is too much risk involved.

Case in point: Let’s say Bobby wants to purchase oil and gas software. The reason he’s even looking for software is because he has a need for it. Either something about how he’s handling his oil and gas presently isn’t working for him, or he’s just starting his business and wants to start it off right.

If Bobby bases his research and purchase solely off of which software company has the best price – then he likely hasn’t taken the time to see if the software is capable of handling the specific issues he started looking for in the first place. He also doesn’t see the value of the software he just purchased because all that mattered was price – a lose-lose situation for both Bobby and the software company.

Bobby didn’t spend the time to qualify if the software could handle everything he was looking for or even if it was the best solution period for his needs. Now Bobby has a mediocre product, but an intact budget, and the software company has a new, but unhappy client who will cost them more time and money in the long run, and who will end up walking away to the next software company who can offer a solution at a cheaper price in the future.

Price vs Value

So what does matter if price doesn’t when purchasing software?

“Customers will shop on price if they have no other way of differentiating you from your competition,” said Carolyn Higgins, president of Fortune Marketing Company.

Software purchases will ultimately come down to this: What is the company’s perceived value of the software and will it help alleviate their pain point?

You might opt out of purchasing a software program and say it’s because the price was too low or too high, but in reality, what you’re actually saying is that you didn’t go ahead with the purchase because you didn’t think the software was worth it. In your mind, you already have an idea of what value the software holds to you – and if what you’re looking at doesn’t reach that threshold – it doesn’t matter if it was the best deal or not.

The truth is that “people overvalue what they have, and undervalue what they don’t have,” said Neil Davidson in his book Don’t Roll the Dice.

Unless you can see the value of what the software can do for your company, you’ll go on price any day – and still not have the best solution for your business.

Value-Based Software

So how do you go about perceiving value?

“When somebody buys software, they want reassurance that it’s going to work and that you’ll be around if it doesn’t,” Davidson said.

Value is in what the software company can offer besides its price.

In Bobby’s search for oil and gas software – he places value in a product that has been used by others like him and that works well. If he’s doing the research, Bobby will want to know that others have used the software and what they think about it. If he’s going to invest time and money in this search, he probably also wants to see how the software works, ask some detailed questions of the support staff and understand what exactly will it take for him to get up and running.

In truth, he’s looking for the support system behind the software. The people. Their values. The way they run their business. Does it align with what he needs? Once Bobby has those questions answered, then he’s likely ready to buy and price won’t matter – whether it’s higher or lower than competitors.

What do you value when searching for software?


Source: SherWare Blog

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