Most Sellers I know have a real fear of price objections. Many are quick to cut the price in order to get the job. The fact is price objections are common and often signal real interest in your offering. It’s a signal to the Seller to guide the Buyer to a decision.
A Seller’s job is to help buyers see the value of their company’s solution, and help educate, inform, and guide them throughout the sales process.
Understand What They Value Before the Price Goes In
What does the client really want and need? What are the consequences to the Buyer and her company if they don’t get it?
Clients may talk about quality, safety, efficiency, and innovative ideas. They may truly value all of these but will be hard pressed to pay more if they believe another provider can deliver the same results at a lower cost.
Before addressing a price objection, you need to know how the value of your offering. Can you articulate why a customer should pay more for your solution and, almost as important, why they shouldn’t?
Consider this example. An IT administrator of a mid-sized construction firm needed to find a consultant to customize a CRM solution. He selected two options. One was a small boutique firm, and the other one was a large, considerably more expensive authorized solutions provider.
A novice at selecting vendors, the buyer asked the rep at the large company, “Why are you two times more expensive than the boutique firm?”
The rep launched into a slick, well-rehearsed pitch on the company’s background, experience, certifications and how they were in the best position to put the construction company on the path to long-term platform success. They had a plan and schedule that would get the job done in 60 days.
The boutique firm focused on the fact that this was the first time the company had hired an outside consultant. They focused on processes, participation challenges, and decision-making. They offered a solution that would take twice as long and at a price that was slightly lower than the big company.
The Buyer chose the boutique firm. He liked the idea of a slower pace and felt confident that he had a company that understood his needs.
Moral of the story is know what your client truly values. In this case, a longer schedule was preferred so the company could absorb the changes and get the participation from internal groups. The more expensive firm didn’t provide a compelling reason for the firm to pay more. Take the time to understand what people need, then explain why they need to pay for it.
3-Step Process for Handling Price Objections
Here is a three-step process you can use to handle price objections.
Step 1 – Determine Why They Are Objecting to Price. Don’t assume you know why they are objecting. Most Buyers negotiate because they are required to do so or they just like it. They may also object because they need to make the internal sell first, or they don’t see the value.
If the Buyer is being contrary, try to flip the script. “Help me understand. We have the solution you need to get the results you desire. Why would you want to pay less for that?” The objection was a poor attempt to drive down the cost. Therefore, hold firm.
Some Buyers will try intimidation. Stick to a win/win approach or walk away. Reinforce the value of your offer but try to give a concession – something that costs you very little or nothing.
Don’t try to go around the evaluator to the ultimate decision maker without first getting his/her buy-in and acceptance. Communicate why you need to work together so that they will be more capable of selling your solution.
Step 2 – Repeat and Validate Their Viewpoint. Seek to understand and to be understood.Take a step back and rearticulate and validate what they’re saying. The goal is to prepare the Buyer to be receptive to hearing the answer to their question: Why should I pay more?
You might try saying something like this: “First of all, it may not be obvious at first glance, so let me attempt to explain why it may make sense to pay more. Then you can decide if we should continue down this process.” By approaching the conversation as partners, you are helping them make the best decision.
Step 3 – Bridge the Value Gap. Determine how you can demonstrate that your solution delivers what they want. Focus on both a financial return (reduced cost or increased ROI) and the emotional benefit (e.g., quality of life, ease of operation, reduced risk). Provide anecdotal evidence of hos this approach has delivered value for other customers. People remember stories.
Prepare your delivery. There is that nasty word preparation again. Deliver the price with confidence. Top performers pause after delivering the price and remain silent. No hemming and hawing, stammering, or apologizing. People believe what you believe. State the price of your solution like you’re telling the time: It is what it is. You are confident, and they can be, too.
Know the value your bid or proposal delivers. Is it real? Do you understand it? Do you believe it? If not, I promise you will become a Seller who routinely lowers the price. Do you understand how your price compares with the customer’s other options?
Price objections have no real power. Anticipate objections and know how you will defend your position. If you can make reasonable accommodations that result in a win/win for your company and your client, then do so. Don’t sacrifice a fair profit to get your foot in the door. The sets a dangerous precedent. Once you learn how to confidently handle price objections, you will quit wasting time on the price-only buyer.