Why Price Doesn’t Equal Value

Too many deals are won on paper and lost in margin. Sales leaders know the pain - your team discounts to stay competitive, but somehow, profit keeps slipping away. The fix isn’t another negotiation tactic. It’s learning to prove your value.

In this episode of SalesTV, we’re joined by Todd Snelgrove, a global authority on Value Quantification and creator of the Total Profit Added™ framework. Todd has helped world-class companies like SAP, ABB, and SKF transform how they price, present, and negotiate - replacing discounts with measurable business impact.

We’ll ask questions like -

* How do I reduce discounting without losing deals?

* What’s the difference between price, cost, and value - really?

* How do I quantify my value in financial terms buyers understand?

* How do I show value to procurement, not just users?

Todd is a Vistage Trusted Advisor, author of “Value First Then Price,” and one of the world’s foremost experts in value selling, pricing, and commercial excellence. He’s taught executive courses at Harvard, Kellogg, and London Business School, helping sales leaders worldwide prove value in financial terms buyers can’t ignore.

Join us live and be part of the conversation.

This week's Guest was -

• Todd Snellgrove, a global authority on Value Quantification and creator of the Total Profit Added™ framework

This week's Host was -

• Rob Durant, CEO of US Operations at The Institute of Sales Professionals

Transcript of SalesTV.live Mid-Day Edition 2025-11-04

Rob Durant [00:00:02]:

Good morning, good afternoon and good day. Welcome to another edition of SalesTV Live. Today we're examining why price doesn't equal value. We're joined by Todd Snelgrove, author of Value First, Then Price and one of the world's foremost experts in value selling, pricing and commercial excellence. Todd has taught executive courses at Harvard, Kellogg and the London Business School, helping sales leaders worldwide prove value in financial terms buyers can't ignore. Todd, welcome.

Todd Snellgrove [00:00:42]:

Thanks, Rob, for the invite to have a great conversation around value and selling it and getting paid for it.

Rob Durant [00:00:48]:

Looking forward to it. So, Todd, let's jump right into it. What do you mean when you say price doesn't equal cost, doesn't equal value?

Todd Snellgrove [00:01:00]:

Well, that could be a long answer, so I'll try to keep it succinct. There's three five letter words. And what some procurement people will do, they will make the assumption that if I get a lower price, I will have a lower cost. So I have to stop procurement and say, do you want the lowest price or the lowest cost? Let's give an example. I just use round numbers, but option A is $100, option B is 120. But option B, the 20, higher price uses less energy, less inventory, the ink lasts longer. Whatever that value proposition is. I care about the total cost being lower and maybe we'll get a chance because it's not just on the cost side I want to look on.

Todd Snellgrove [00:01:41]:

I also want to look at the value side. Increase revenue to me is a value to a company in some industries. Time to market. If I can help you get your product to market before somebody else, that's a big deal. So, you know, not to be arrogant with customers, but if they say your price is too high, say, but I have a lower cost. And then they go, what? What do you mean? And then I try to go through that example and then what I do sometimes is build models around this so we can put numbers in that are company industry country specific. Say, you know, the lowest price one is actually the highest cost one and cost savings are what drive your bottom line, not price savings.

Rob Durant [00:02:27]:

So it's more about the total cost of ownership.

Todd Snellgrove [00:02:30]:

And the only difference by adding the word value is that. And it was a professor, I was saying it's total cost. But there's all these other drivers that make a company more profitable. And I as a buyer want to be more profitable. So again, increased production is not a cost reduction. Increased quality is not a cost reduction. Now, most people on here could find a way to reverse engineer it, but it was A professor at Kellogg in the US said, Todd, hopefully I got a good funny story here. If you want customers to rethink, you have to come up with a different term.

Todd Snellgrove [00:03:03]:

And I was at a procurement conference and the guy running in said, todd, what you're saying is we should be more profitable. We should buy on what I'm going to call total profit added, which is total cost of ownership. But say, why are looking at all these other things that make me more profitable? So if you allow me a two minute, I think it's a funny story. I'm doing a session years ago and I walk you through this model. Somebody builds something, somebody buys something, somebody uses something, somebody throws away something, dispose of something. And I was very lucky. My CEO had to be stuck in a room listening to me for 90 minutes. And he goes, our procurement team talks about total cost of ownership savings all the time.

Todd Snellgrove [00:03:45]:

But Todd, I don't think we have a model. And all I know is at the end of the year, there's no more money. So where are all these savings going? So when I finally meet with this great gentleman I've done a lot of work with since they said, what do we measure? And he said, you know, unit price of the product or service that meets the requirement, plus delivery and currency and payment terms and minimum order quantities. And I won't bore you with all the examples, but that's landed cost. You're making the assumption that the cost of use will be the same. Some people, we all know the razor blade example, I can't get parts. And when I get the parts, they're very expensive, they might lose more energy or water, ink or operating stuff. So, you know, total cost of ownership.

Todd Snellgrove [00:04:31]:

Sometimes I really have to ask my clients, what do you mean by that? And what do you measure and say this total profit added, or call it total cost accurate. I guess you'd say total cost of ownership includes all these other things. In some industries, the disposal cost includes is huge. In some, it's just throw it in the pile. But in some industries, it's very important.

Rob Durant [00:04:57]:

So when I'm a seller and I talk to my buyer and then they send it off to procurement, how do I then show value to procurement, not just the users?

Todd Snellgrove [00:05:16]:

Great question. So you've got the user, the, the, the person that's actually going to use whatever's being bought. Finance and procurement's job is to buy it at, you know, ethically from the right supplier, all that stuff. I would want to equip my contact the, the user with the business Case that's clear, concise and that's that they can explain so it's not over complicated or, or over engineered. And they say yes boss, I know this price is higher but actually the total, the value we get is more. So it's my job to build a business case to equip them with. I would love to go with them to procurement. I would like to go to procurement also and proactively say we've got a way and I'm going to make up numbers that can take a million dollars out of your operating cost, reduce this, increase that.

Todd Snellgrove [00:06:08]:

But you know the price of the widgets to do it is going to be higher than maybe what you're buying. All the customer can ask me is how do you come up with that number? Where have you done it before? What's the probability it will happen? Are your references reasonable? Maybe they will ask, will you guarantee it? I have answers for those questions. So I don't want to hide from procurement. You know, I want to get a conversation earlier. I can frame it around best value. And when I say value I mean hard measurable stuff, not I'm a nice guy and we're doing lunch and like here's a golf shirt because that's sometimes what procurement thinks. Oh, he's a great buddy of yours. Well it's valuable he shows up on regularly, he's proactive.

Todd Snellgrove [00:06:51]:

They don't hear that as a real value pitch. Sometimes that's measurable.

Rob Durant [00:06:57]:

So then what are the biggest mistakes sellers make when they're talking about roi?

Todd Snellgrove [00:07:04]:

A few I think. One, they don't do the homework and again it's the sellers in conjunction maybe with marketing, product manager, some I hate to say, smart person that really knows the ins and outs but you know, using vague terms, you know, more reliable. What does that mean? So saying something that's vague, faster, better, less, easier, you know these, these subjective things, not putting numbers to it even if the ranges between 2 and 4% we'll just say energy and building a what's called a strawman estimate of what I think something is or asking the client what are their numbers? I want to get client numbers because then I can say Bob told me this, Joe told me that they co created the business case. But what I found over 25 years of doing this, sometimes when I ask people open ended questions with no reference point, they look at me and go I don't know. So and it was funny because a procurement person was saying, you salespeople seem to think when I won't give you Numbers, it's because I know them, but I don't want to give them to you because you will use it to charge me a higher price. It's not true. I don't know. And this gentleman, I won't say what company said, well, Todd, you're a big manufacturing company, said, yes.

Todd Snellgrove [00:08:21]:

How many pumps does your company have? What's the average life of them? And I just asked him these questions. So he's like, okay, now if I would have gone in and said, I've done some research. One facility was this. So your total would be that. Or the average within the industry is this. If I throw a number out, they will say, okay, we're looking at a model, so let's just see how that goes. Or we can call Joe and he'll have that number. But, you know, zeros on about, on a, on a spreadsheet or on a piece of paper confuse people.

Todd Snellgrove [00:08:53]:

So going in with numbers that are referenceable or reasonable to start a conversation. Higher, lower, close enough. Does it really matter? I got into a discussion with the European company and they're like, you're asking us for our average labor cost for a mechanic. We can't give that to you. Depends on country, Depends on if they're level 1, 2, 3, or expert or whatever the term is. And I said, give me the range. £20, £25, £30. Let's use £22.

Todd Snellgrove [00:09:20]:

This is not a cost accounting exercise. Neither one of us had the time, effort, or need to do this. We're trying to figure out, here's the investment and the ROI is here, here, here. So putting numbers on it usually makes that much easier for the client. And then having some references to it. And I think the final point, and this has come from people before, your belief in that true value. We've all done maybe sales training, we could all put a slide up and the customer goes, yeah, but. And people cave.

Todd Snellgrove [00:09:52]:

I don't know where it came from. Head office sent it, or it's made up and customers have said, you seem to believe this. And again, I'm not trying to make myself sound good, but it's that believability. And I won't name one of the sales training programs that's out there. But sometimes I watch salespeople leave that and try to regurgitate somebody else's story and it comes across as flat. Take my stories, change them, please. But believe in what you're talking about. Because if it's just reading a slide or a PDF or whatever, they can smell it.

Todd Snellgrove [00:10:26]:

They can smell the weakness, the fear, the lack of research. So hopefully there's some stuff buried in there.

Rob Durant [00:10:31]:

Rob, I want to dig into that, but before I do, I wanted to share. Our audience is welcome to contribute to the conversation. Samantha Tong says marketing should definitely be doing their job to make the salesperson's life easy. Amen. Case studies with numbers are fantastic. Again, amen. Thank you, Samantha.

Todd Snellgrove [00:10:58]:

If I could just add to that. One way to make this happen is there's always been this, you know, sales, single marketing and marketing back to sales. Because it depends which industry people are in. But in some industries, marketing is mark con. They make the brochures that the golf shirts, the trade show. I'm not minimizing this, but they would say to me, todd, we don't go out in the field. How would we know? The product manager didn't give me that information so I could build this. There's always a little bit of this.

Todd Snellgrove [00:11:28]:

So having as part of your systems when you're creating a new product or service, are we measuring the actual impact? I'm amazed at how many companies launch a product and say, we asked customers if they would want it. Like, well, what impact did we have? Nobody bothered to write that down. Well, at least I would have had a starting point. And then I think also is to, you know, push back to marketing and say, here's, here's what we need. Here's what I can do to go get it. And then I'm sales, so I can be out with the customers asking these questions. But then you need to aggregate and frame it. And the last point I'll make, which I just started doing a few years ago, if you're working with, we'll say a key account, strategic account, you know, and you say, I'm going to deliver all this value, whatever that is.

Todd Snellgrove [00:12:12]:

I asked them before we, as we're signing the contract, if we succeed, whatever those KPI measurements are, I'm getting a case study. I have never had somebody say no because it's the easiest, freest give on their part. They're pushing. They want a discount because they're going to buy zillions of dollars, blah, blah, blah. Well, I want this. You know, I'll bring my iPhone, I'll have my marketing people talk to me. This is what it's going to look like. That's very valuable to me as a salesperson, slash, giving it back to marketing.

Todd Snellgrove [00:12:42]:

But what I found is if I go back afterwards, magically, I can't get anybody to do it. It's after what's in it for me. We are not allowed to do that. That needs to go to corporate. We can't show favoritism to your company versus other people we buy from. There's 100 excuses. It should be part of every contract you sign with the big enough customers that you are going to bring value to write it in. It should skate right through because it's a free gift on their site.

Todd Snellgrove [00:13:08]:

It's not costing them anything. And that's how you get better numbers, I think.

Rob Durant [00:13:13]:

So. We have another question from the audience. Rob Van Cleef asks, is it valid to reference non financial value drivers? For example, accidents avoided, carbon footprint reduced, et cetera, 100%.

Todd Snellgrove [00:13:28]:

And there's two or three thoughts there. One is you can quantify accidents avoided. There's a cost per accident. I did a session for a safety association in the US and there's cost per level of accident. So there's two ways I would put these other value drivers. I would put a number beside it and an incident or subjective number. You know, non qualified number because some people say, you know, that number is important to this person. Don't spend all your time in a lot of countries, you know, CO2 reduction, you might be able to put a number to it.

Todd Snellgrove [00:14:00]:

But as an expert professor says, those are called value placeholders. So you've got your financials at the top of the case. Then you've got the section that says other value delivered and you list those for sure. And what I used to do is just put $1 in there. If you put zero to people's eyes, just go by, it's $1. But we should stop and think, is this a value? And maybe change that number. And sometimes you can quantify and just say accidents depend on what type of accidents. But the average cost per accident.

Todd Snellgrove [00:14:30]:

In the US there's a number, I don't remember it right now, but back to Rob our discussion on doing our research, I was amazed. You know, it'll be different by industry and this type of stuff, but please enumerate them. Please put whatever numbers, even if it's tons of CO2. If you can put a dollar amount, it's great because some people think only in dollars. I laugh. If you put two numbers in front of me, 5 and 7, I go $5 and $7 12. The dollar sign makes a difference. My kids laugh at that.

Todd Snellgrove [00:15:01]:

I'm like, it's amazing. I can do any math if you put a dollar percentage. But you know, there's no monetary value. I just don't get it. As excited.

Rob Durant [00:15:10]:

That's funny. So I wanted to circle back. We had started down this path. How can I teach my team to defend margin confidently?

Todd Snellgrove [00:15:23]:

Great question. I mean, I think it starts with belief that you actually deliver something better. And again, if the whole thing is, we've been around more years than the guy down the street, you're 100 years and the other person's 80 years, I would really challenge. Okay, we got to work on our value proposition and whether that's our product are better, the services around that product are better. I mean, our ability to deliver, it's better. But I've got to have something if not again, I think that makes a difference. Kind of in line there. Something that we did a lot of is role playing, because we know these are the pushbacks we're going to get from certain customers.

Todd Snellgrove [00:16:01]:

So we learn from other people how they. What examples they use, how they explain risk, how they explain the value proposition. But does your company have a clear, concise value proposition? Is that value proposition measurable? Do you have a tool to build these cases, measure these numbers? I mean, we don't want every salesperson have to pulling out Excel or a piece of paper trying to write all this down. That's not their job. So have we equipped the sales team to do it? Do they believe there's value there? And somewhat in line, but one thing that could really screw things up, which we know is not your question, but compensation. And I would have colleagues come back to me. And my CEO finally laughed. He goes, Todd, I bet there's 400 different ways the sales team discounts big order, new customer, new channel, special op.

Todd Snellgrove [00:16:52]:

I mean, you name this. I have not given them one program that says, I'm not discounting, but here's my value guarantee or here's my value commitment to you, so they'll revert to the programs that exist. And one colleague once said to me, don, I could cut the price 5% and I'll make numbers up on a $5 million order and get it today. Or I could fight with these people for 30, 40, 50 days to not discount. It's only 5% the company I work for. I mean, you got to get the sales team getting away from contribution and gross margins and all these numbers to nets.5% for most publicly traded companies is half the profit. And we were in an industry where, you know, we could build new business tomorrow. There wasn't a new factory being open.

Todd Snellgrove [00:17:42]:

So it's like if we cut the price 5%, that's half of our net profit. Or 10% as a company, maybe I shouldn't compensate you the same way. He laughed, he goes, now you got my attention. All revenue is not equal and we don't need to get into these algorithms that are all over the place. You know, what's the price of steel today? And you need to allocate more of that because you flew an engineer out. Just flat out, here's list, here's my company's net margin and then I can figure out if I do a 5% price reduction, that price comes right off that bottom line for most businesses and say, oh, you know, because I know we did pay certain people that discounted more and more money. They weren't alive. And again, from what I do, the sales team, I mean we can push and suggest how we should get paid, but I mean, hopefully everybody here agrees if we fight for our value and we get paid for that from the customer, we should be rewarded for not discounting.

Todd Snellgrove [00:18:38]:

And you don't need a good salesperson to discount. Computer can do that. I mean, so I want to pick.

Rob Durant [00:18:46]:

Up on that fighting for it. But first, we have a comment from Melissa Bradley Holstein. I apologize if I butchered the name. Todd brings up a great point. Companies that want to really back up their claims of value should start with themselves where applicable. Absolutely. And thank you for that, Melissa. Todd, I wanted to ask you, when should I walk away from a price driven buyer?

Todd Snellgrove [00:19:19]:

There's a few situations. Again, take the customer situation and try to figure out who's got power. Okay. And a lot of the industries I work in, there's five players that are all big, well, reputable. I mean and a lot of the products that I've worked with in the past are substitutable, but the same size fit in the same spot. So it's not like mine's a completely different. I think first of all, if the customer wants to be price focused, then we have to reduce the services or any extra value we're delivering and charge them for every negotiation should have a trade off. We'll make numbers up.

Todd Snellgrove [00:19:57]:

Rob, if you want a 5% discount and my competitors are giving you this, but I believe my value is engineering and whatever those services are, I'm going to pull that away. And what a procurement told me, gentlemen told me once who ended up running one of the big four global consulting companies, Procurement Strategy Group. He said, what's hilarious is the more I told suppliers I didn't value what they did, the more they gave me for free because it's the salesman I'll show you how smart my company is, how good it is. I'm in trouble on Friday. I don't have the inventory. Yeah, we'll rush ship you that. Nope, you wanted the discount. Now you're going to pay for all this.

Todd Snellgrove [00:20:39]:

And just stop and think back. This is what different industry. Use the cruise lines as example. Here's my package price. Here's all the value you're going to get again, Wi fi, drinks, whatever that is you want to pay a lower price, then I'm going to add that back on. And what most people will do is sit back and go, wait a minute, it's going to end up costing me more if I unbundle this. If I buy the Happy Meal in little pieces, it's going to cost me more. Am I really saving any money now? I have risk, but let's agree on what value will deliver, what that value is worth and that that value is worth more than the price difference that I can get from an alternative.

Todd Snellgrove [00:21:19]:

But you have to have some structure around this. I mean, here's my value, here's the value of that value. Here are the numbers. We're going to use that type of stuff.

Rob Durant [00:21:29]:

I know we're getting close to the end of our time, but I did want to ask you one more question before the big question. Are there any metrics or tools that you can recommend that help me calculate total profit added?

Todd Snellgrove [00:21:43]:

Yes, sir. And what I can do is in the newsletter that you send out, put a link or two in the different ones. When I started, it was a piece of paper, then a napkin, then Excel. I mean, there wasn't anything. Now there's some good tools in the marketplace. There's one I really like because it does the research. Anybody can do sell a 1 times cell B2 equals whatever, C3. This one actually goes out based on the industry, the customer, your offering versus a competitive offering.

Todd Snellgrove [00:22:13]:

I mean, I won't bore you with it, but it pulls all these reference points back in. It says, this is the average this or this is worth that. It does a lot of the back legs so you can be out there focusing with customers. So I'll get a link in the newsletter for that and just go, you know, I think there's a 30 day free trial. Go around, play with it, build a model, see what it looks like, play around with it. And if you need, reach out to me. I can always have a quick chat.

Rob Durant [00:22:38]:

Fantastic. So here's the big question, Todd. If you were to emphasize the one thing you would want our audience to take away from today's episode, what would that one thing be?

Todd Snellgrove [00:22:52]:

Customers might be able to measure price, but they need to focus on value. It's our job to define what is value, how to measure that value, to stand up for that value, to price for that value and get the customer to nod and go, you're right, a 10% price savings. Yeah, but a 10% value is worth more. And I'll leave you with this question, Rob. And it's one of my early successes with the customer. We were fighting and there was two competitors in a room. I'll just use simple numbers. One offering at $1 million was bigger, but a million dollar contract with a 10% price reduction.

Todd Snellgrove [00:23:28]:

And I offered a million dollar contract at a 10% annual value guarantee. So we have to agree what value is. We have to agree how we're going to measure it. We have to agree with. Numbers are going into it. But you know, and the client said, Chief Procurement Officer Todd, why would I have to do all this work for 10% value versus 10% price? I said, because 10% value per year is worth three times as much as 10% price off. And again, you know, 10%. My competitor did not offer a 10% price reduction per year.

Todd Snellgrove [00:24:04]:

It was a million. Down to 900,000. 900,000 for five years. Forget inflation. I was a million in energy than inventory. Then reliability, everything per year. And there's some great statistics. I can't remember every procurement association that would study because they're not sitting in front of me.

Todd Snellgrove [00:24:24]:

But a huge American Procurement association says that companies that buy in best value is what we're talking about. Are 36 more profitable than ones that are not. Don't do this. So it's not just us.

Rob Durant [00:24:36]:

Can you say that again?

Todd Snellgrove [00:24:38]:

Oh, I can say it. Maybe I'll put some statistics in your newsletter and I can reference them where they come from. Companies that buy best value versus lowest price. That's good enough. Are they're publicly traded. Are 36% more profitable than companies that do not. I've got five procurement associations that say the same thing. In the book that I wrote.

Todd Snellgrove [00:25:00]:

Sorry. That I was involved with, there's actually five procurement people saying we'll buy value, but the supplier needs to identify what value is, show how they're going to deliver that value, measure that value, and maybe even guarantee to get paid based on some of that delivery. Not just saying, you know, I'm a great guy, I've been around a long time and I'm nice. I can't pay for that. I won't pay for that.

Rob Durant [00:25:25]:

Todd, this has been great. On behalf of everyone at Sales TV Live, to you and to our very active audience today, thank you for being a part of today's conversation and we look forward to seeing you on future episodes. If you liked what you heard today, please take a moment to leave a review on Apple Podcasts, Spotify, Substack or YouTube. Let us know what you learned and more importantly, what you'd like to learn more about. Your feedback helps us reach more people like you and helps us fulfill our mission of elevating the profession of sales. Thank you all and we'll see you next time.

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