Price vs. Cost

As we've discussed before, language defines culture. Putting a word to something conjures an image and an expectation of the thing named. That's why shamans and occultists put so much store by names - they understood that naming a thing gave them power over it. And for any business that sells any good or service, nothing is more important than the definition of and the distinction between cost and price.

Price is the sticker on that new car. It is a liquid word, and implies flexibility and negotiation. It also identifies the thing to which the price is attached as a commodity... that is, an item that exists in identical form at the business down the street. Anything that is a dime a dozen has a price, and we just named it. (But we'll give you fourteen for that same dime if you buy today.)

Cost is a fixed quantity. In the Customer's mind, it is an immovable object. "The cost of X is Y." There can be no negotiation with cost; it is what it is, and that's what it costs.

Now here's the part where you learn a new language: Everything sold has a cost. Nothing has a price. Ever. This is not a negotiating tactic, nor is it a sales formula. If price has ever passed your lips, you have used the incorrect word. That is a fact, and I can prove it to you:

To have a price, an item must be a commodity - that is, an identical item must be available elsewhere. If you have the only one of a given item that exists anywhere in the world, what you charge for it is not negotiable, simply because it does not need to be. The Customer cannot purchase the exact same item elsewhere, so he must pay what you ask or go without.

"But we sell X," you say, "and the guys down the street have X, too."

To which I say, "No, they don't. No one sells what you sell. And you know why? Because X is not what you sell. X may be included in what you sell, but what you sell is you - your organization and how you do business. Your customer service, your terms, your speed of delivery and accuracy of execution, your satisfaction ratings, your industry awards, your knowledge, and on and on. That is what you sell. And it has a cost."

Make a list of these things (they're called Points of Differentiation, or POD's). Trumpet them. Be the best at them. Don't make anything up or spout half-truths. Make them things that you can say to your kids or your reflection without blinking, looking away, or laughing. Make sure that everyone in your organization - not just the salespeople - knows them by heart. And if you don't believe them, sell your business to someone who does and go home, because you have already given up. Why take everyone else down with you?

One final note: Slap anyone who says that a service has a price, ever. A service is as individualized as you can get - no two haircuts are any more alike than two snowflakes or the services performed by hookers in Vegas.*

*Or so I'm told.

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