Whether selling a product or service, multiple products or multiple services from time to time we’re likely to come across objections from the client or prospective client about the price.
Objections to price are interesting because they can point to the perception and thinking of the other party. And of course constant testing of price will take some people to their edge… and that’s where we have to make decisions.
However, caving in on the price is an answer but not necessarily the answer… it sets expectations with the client that not only will they always be able to get the product or service at this price but that we will always lower our prices. They start to value the goods and services less, and each time will try to beat us down on price a little more and we start to value ourselves and the products and services less and the brand as a whole is devalued.
Where goods and or services are filling a need the client has then work out with them what not having that product or service will have cost them in the last 12 months, the last 3 years and the next 12 months and 3 years or longer if its clear that there has been leakage in some way with profit for a longer time. If there’s going to be tangible saving of £x or a tangible increase in profits of £y then its very easy to demonstrate the value of that product or service and the ROI that the client or prospective client will get.
For example if you were selling a management information reporting package that enabled the client to have at their finger tips the up to date financial, stock and sales information for the business so that the real time position could be seen on a daily basis which then fed into the monthly reporting. Whereas at the moment its only possible to get the information on a weekly basis because the way the data is gathered and processed is so time consuming and it takes the MD of the business 3 days a month to pull together the stock, sales and financials summaries, actuals and forecasts. Then it’s easy to demonstrate the cost benefit of a system that costs £5k say.
We also have to establish that an objection to price is real objection, a comment of ‘that’s expensive’ especially when the person is smiling probably isn’t a real objection… there’s no reason why you can’t simply respond to that yes, isn’t it and carry on. If there’s a real objection to the price we’ll get a different response, different, question, different body language.
If it’s a real objection then ask them about their experiences of finding the best quality, product or service at the cheapest price, its unlikely they have every encountered that and so will get them to consider and set the product or service we are selling as a superior product or service. You can also ask they are the cheapest in their market.
Remember though without contrast everything is expensive or cheap: that’s why people have a range of packages for the service, or a range of products. Not just so that there is a choice but so there’s contrast between different levels or products and services. It’s important to acknowledge the differences and the differentials and guide the client to the solution that will be the best fit for them.
One of the great things to ask the potential client is if thry needed brain surgery would they want the person who was prepared to do the surgery for £250 or the person who says that it costs £25k. Both surgeons may have the same skills according to their advertising but would you really want the person who only charges £250?
If the prospective client or client asks for a discount consider what else you can offer them that will be of little impact re time and cost but give the client additional value. Can you bundle things? Provide some consultancy? What added after sales service could you give them? What guarantees including reverse guarantees can you offer? If they are buying goods in volume what buy back deal could you do for the unsold stock with an agreed timeframe. But whatever you do don’t leak your margins else the profitability to you is eroded. The whole deal becomes burdensome and their value as a client is eroded.
It gives you a really good insight into the type of client they are likely to be and I’ll wager that they won’t be the perfect client and will need a lot support etc. which in turn erodes profits even more.
Here’s a few great considerations re price objections from © 2007 Tim Breithaupt – I particularly like number 5.
Your price is too high…
- Compared to what?
- What was your expectation?
- I’m glad you mentioned price. That is actually the best part about my proposal. Our price makes a statement about our value and the quality associated with your purchase. Imagine your response if we were the lowest…
- We can be the lowest if that is your main buying criteria, but you need to make a decision on what options or benefits to cut from our proposal so that I can reduce your price.
- If I honestly felt that low price was your principal buying criteria, I would have gracefully declined making this presentation and suggested other vendors for you to consider…
- As a consumer, when was the last time you made a purchase based on price only? I suggest that you haven’t… let’s review the benefits associated with this purchase.
- Is the price too high in comparison to your budget or compared to other competitive quotes?