How to pitch a cost reduction product or service

It’s been said that ‘a penny saved is a penny earned,’ but that was written before income taxes existed, so in today’s world, a penny saved is in some ways more than a penny earned. For business, this is even more true. For example, a small business with a profit margin of 20% has to bring in $100 of revenue to make a profit of $20, and then taxes will take at least $5 of that. So, for the same business to pocket a $15,000 profit, $100,000 of revenue has to walk through the door, so to speak. To pitch cost reduction, having an understanding of what your prospect has to do to make a profit can make the difference between selling effectively and having to move on to the next prospect.

When selling a product or service that will save a business money, the savings alone is unlikely to be enough to close the deal. Many studies show that cost is usually #6 on the list of reasons why a business chose one particular vendor over their other options. Some of this has to do with human nature and our need to be comfortable with with the people who are selling to us, but to some degree this can also be attributed to the fact that too many salespeople still present cost-reduction-oriented products and services as being merely a means of ‘saving money.’ While it’s the truth, it doesn’t tell the whole story, and therefore can turn your product into little more than a coupon.

In the above example, once I’d established a bit of rapport with the prospect, I asked a simple question. “I’m sure you’re probably happy with your current provider,” I said, and he nodded before I was done with the sentence. I smiled, and said, “But can I ask you a question?” He nodded again. I continued, “Are you happy enough with them to buy them a car?”

He furrowed his brow, seeming to think it was a trick question, and then smirked. “No, of course not.”

“I know it seems like a silly question to ask,” I replied. “But do you know why I asked?”


“Because every 5 years, you’re buying them a Mercedes.” I let this sink in for a moment. “Knowing your current provider, odds are we’d cut your cost by about one statement per year. Your statement’s about $15,000 per month, so in 5 years, that’s $75,000, which is about enough to buy a brand-new Mercedes GL. Now, how much business do you need to walk in your door to make a $75,000 profit, after taxes?

His skepticism vanished, and now he wanted to know how I could make this happen. Why? By presenting the cost reduction as a profit opportunity specific to his revenue capture profile, I was no longer a salesman in his eyes, but a potential business partner who understood his business well enough to give him a fresh perspective on a cost detail he viewed as a necessary evil, but  to which didn’t give much other thought. You’d be surprised just how often this happens.

This being said, always present a savings as a profit opportunity, and be sure to know your prospect’s business well enough to have at least a rough idea of how much business they’d need to do make a profit equal to that savings. This alone can boost your closing ratio significantly, and coupled with your ability to communicate your genuine interest in their success, it may very well increase your likelihood of referrals.