How does one deal with this seemingly unrealistic demand? The same way one might eat an elephant - one piece at a time. First, you must decide if you will compete on price, added-value or both. Competing on price alone is a slippery slope and centering on added-value without price consciousness is, frankly, counter to most marketplace migrations. So, competing on price and added-value concurrently seems to be the best overall approach. But how does one accomplish that goal? Consider the "Good, Better, Best" strategy, offering good, solid value, no-frills products to those customers who are 100% focused on price. For customers who demand added features, offer a "better" category of products that would naturally cost more and provide a greater margin. And, for those customers who want the best and are willing to pay for it, offer the "best" category, with appropriate prices and margins. Selling and specifying techniques might have to change slightly to leverage a "good, better, best" strategy. But in the end, offering the customer a spectrum of features, content and prices, with a logical sales process to "move them up," where possible, is almost always the best bet.
Businesses that have adopted a "good, better, best" platform mentality have found that they're in a position to go after the lower budgeted/lower margin business, while also maintaining the flexibility to easily respond to higher priced/higher margined jobs.