Why You Need to Know Your Client's Price Tolerance Ratio

Every customer has a price range where they are willing to make a decision without any further thinking. I refer to this as the Price Tolerance Ratio (PTR).

Knowing your client's PTR is critical. It is one of the major obstacles salespeople fail to comprehend. As a salesperson, when you don't understand a client's PTR, at least one of the following results is inevitable:

• You offer a price that does not maximize the profit potential
• You get the order but encounter resistance from the customer that hinders the relationship
• You encounter resistance that leads to spending too much time on the selling process and ultimately no order

Let's look at each of those individually, starting with the first one where the price offering does not maximize the profit potential.

I start with this one because it is the most common. The salesperson rarely finds out the price is lower than necessary until long after the sales is completed. Or worse yet, they never find out.