How do you respond to price is too high?

Isn’t it always? It’s rarely that you will ever make a sale without this statement being posed to you. You see, Price is the easiest challenge that a prospect can pose to a sales person. There is no need to justify it with any data or proof points. All a prospect needs to do is just say those words and see how the person across the table reacts.

If you have read some of the quick fix sales books, you might have been taught to close the sale all the time. In these circumstances an inexperienced sales person will try to lower the price right then and get the sales done. Often it goes like this: “I can see why you might think that way. So, if I can bring down the price to say XYZ, can we close the contract today?”

These scenarios are thrown all too often and the sales people faced with this situation think that they are so close to sealing the deal, that the only thing left for them is to drop the price and the contract is theirs. In reality that is seldom true! While in the above case you are negotiating against yourself and that is never a good idea (not just in sales, but just about anywhere), even in cases where the customer throws out a lower number without credible data, it’s not a great idea to drop the price straight away.

To understand the above scenario, put yourself in the customer’s shoes. Let’s say you were selling a million dollar program and you are faced with the above question. So, to get out of the situation, you say “I can see why you might think that way. So, if I can bring down the price to say $900K, can we close the contract today?”. It can also be the other scenario, where the prospect asks you to reduce your price by 10% and you do it on the spot. So, what do you think is going on in your customer’s mind:

1. I got a 10% discount immediately. Ain’t I great!

2. Wow, this guy dropped the price by 10% so quickly, I should have asked for more.

II think you know the answer

Also, if you are an account manager and do business with this customer repeatedly, guess what will be their ask next time you have something to sell.

So what do you do when price becomes the objection you have to overcome?

When faced with the above question, it’s always a good idea to put the ball back in the prospect’s court. Simply ask “I appreciate you sharing that with me. If I may ask, why do you think that way”. This will give the customer an opportunity to tell you if they think that way because they don’t perceive the value or because they’ve had your competitor give them a different number or if it’s something else entirely. This gives you the next course of action, rather than blindly responding to the objection.

1. Fight or Flight

This heading might not be entirely appropriate as ‘Fighting’ your prospect is never a good idea, but you get the point. I’m sure before coming to the meeting, you have evaluated the costs you’ll incur to run this program and based on it you have come at price you believe works for you and the customer [This is an important point to note, sales isn’t a profession (even though it’s projected as such in pop culture) where you are trying to fleece the prospect, you have to be fair in your approach to come at winning propositions.]. If you have worked with this customer in the past, this is a good time to remind them of the partnership you have shared so far and the reliability and quality you have delivered to them. That’ll remind them of the quality you bring to the table because of which you are charging the price in front of them.

2. Emotional Quotient

The company you are prospecting to is running a business too which means that they have a product or service that they charge a price for. By reminding them that you are quite similar to them because like them you charge a price to customers backing it up with high quality and resulting in happy customers will strike a cord which connects them to the deal emotionally.

3. Cite other customers who bought at the price and received the promised value

It’s always a good idea to remind them (‘remind them’ because I’m assuming you’ve shared this during your sales cycle already) about the value your other customers have experienced and how they believe that hiring you was worth every penny paid for it. This is important to bring out again, as then the prospect will have to justify why despite all the above quoted examples, they still believe your price to be high.

4. Dropping the price has consequences

This brings us to the first point, if you are confident of the price you had offered upfront, you can politely communicate to your customer that you can drop the price but that will entail you to remove some of the features that you had initially proposed. More often than not, the customer will respond by saying that they want all the features that had been initially proposed, in which case there is a justification already to go with the original price too.

Now to the moment of truth. There will be times, where despite all your efforts and reasoning the prospect just doesn’t see the value for the price. That’s when the next point might help out.

5. Make them your partner

Let them know that you will have to check back on the price. And this is not just a sales tactic. More often than not before dropping any price you have to get the buy-in from your company (unless of course you are the owner of the company). This is a good time to mention how they can partner with you to enable that. It can be with respect to flexible payment terms, or project deliverables or resource enablement etc.

The above mentioned points will get you to the root of the question “Your Price is Too High” poses. Like I mentioned earlier, the story doesn’t end here. There are scenarios where you might still be needed to lower the price. More on those in a future blog post.