A Reflection on Price Sensitivity

Dale Furtwengler is an American sales expert who gained recognition for his study on customer price sensitivity. He led an extensive market survey and interviewed a wide range of clients, with different purchasing profiles across various industries, to observe buying behaviours. He gathered valuable insights and published the results in his book Pricing for Profit.

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This consultant begins by stating that all customers have money. Some have more, others less, but everyone has some, and they are free to choose how to spend it. If a client tells you they do not have the money to purchase your product, this may simply indicate that they did not perceive sufficient value in it. You must therefore do a better job of demonstrating the true value of your product, your offer, and your brand.

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In his study, Furtwengler discovered that, regardless of purchasing profile or financial means, most customers tend to show greater price sensitivity—that is, a stronger inclination to pay less—when buying out of necessity. Conversely, the same customers exhibit lower price sensitivity, meaning a greater willingness to pay a higher price, when they buy out of desire and pleasure. The motivation behind a given purchase shapes how we respond to price.

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Upon reflection, we may conclude that if your product is primarily driven by desire, it is reasonable to expect that the client will be more willing to pay a higher price, and, in principle, the sale will be easier—provided you know how to serve them appropriately.

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However, if your business is based on necessity-driven purchases, the likelihood is extremely high that your client will want to negotiate the price, regardless of how much money they have. In this context, the client is highly price-sensitive.

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It seems both obvious and fundamentally sound that, in such cases, the provider should make an additional effort to deliver a level of service and attention that exceeds expectations—truly surprising the client and making them feel so valued that it softens the sense of buying out of necessity. In doing so, the client may be persuaded that it is worth paying a little more for the exceptional service and attention received, which enriches the solution they are seeking.

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Does this idea resonate with you, dear reader?

I invite you to reflect on it.

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