“Your price is too high,” is the number one objection that salespeople encounter. Preparation for these objections is fundamental to your success. Whoever is better prepared for the objection—you or the customer—emerges victorious. So how do you deal with price resistance when it surfaces?
Slow down the process. Your immediate reaction when you get a price objection is to do nothing and slow down the process. Take a long, deep breath. Time and emotion are your biggest enemies at this point in the sale. You need time to think and time to make a good selling decision. Buyers know that if they push you to make a quick decision on price that emotion will drive the decision.
Clarify the price objection. More than half of all price objections are phony, according to one research project. The first step in dealing with any price objection is to clarify what the buyer is really saying. Dig for the what and the why behind the objection. What the buyer wants is his negotiating position. Why he wants it is the motive behind the price objection.
Clarify by repeating or restating the objection. Be sure that you understand fully what the buyer is saying. For example, “When you say we’re higher, would you be more specific, please?” “How is our price higher?” or “Please elaborate for me.” These three clarifiers encourage the buyer to respond more fully.
Dig for the motive behind the price. “How did you arrive at that budget?” “What did you anticipate the price to be?” “Why has price become an issue for you?” Uncovering the motive behind the price objection will suggest the way to deal with it.
Check the buyer’s focus. What is she really looking for? Is she comparing apples-to-apples? Is she referring to the acquisition price or the cost of ownership? If her focus is short-term, shift it to long-term.
Check the buyer’s sincerity. Is she giving you a real objection or is this a fishing expedition? “Is price your only reason for hesitating now?” “Are you prepared to move forward if we resolve this issue?” These questions test the buyer’s sincerity.
Respond to the price objection. You can respond to the price objection in a number of ways.
First, change the package to meet the price the buyer is willing to pay. Add value through bundling. “If you have a concern about the relationship between our price and the package, maybe there’s a way that we can add value to this package so that you feel more comfortable with this solution.”
Subtract value through un-bundling. “If your primary concern is price, maybe there is a way for us to remove some of the value from our solution to equal the price that you’re willing to pay.” Some people call this value subtraction. Others call it value substitution. The value of this response is in the shock impact on the buyer. What you’re saying is, “The only way for us to charge you less is to deliver less.”
Second, restructure the deal. There is no such thing as a bad deal, just bad structure. “If budget is your primary concern, I’m sure there’s a way we can restructure our package to reflect the budget constraints you’re working with.” You might be able to change the terms of the agreement or adjust the billing cycle for your buyer.
Ask thought-provoking questions. Pose questions that will cause your buyer to rethink her request for a cheaper price. You can cast doubt by saying “We know what it will cost if you pay a little more to go with our guaranteed package of value. The only unknown at this point is what’s it going to cost not to go with us.” You’re casting doubt on what they may not receive from the competition.
You can tap into security needs by asking, “Is price the safest decision you can make at this point?” The word safest jumps out as the key word in this sentence. It’s emotion-packed. You’re asking the buyer to reconsider whether price is going to get him to where he wants to be.
Argue from the buyer’s point of view. I read an article about a U. S. congressman who negotiated the release of some Americans in a foreign country. In the article he said that in every negotiation in which he participates, he argues his position from the other person’s point of view. That’s the logic behind this strategy. Argue your case from the buyer’s point of view. Reverse the objection. The buyer rejects your price. Your total cost is lower than the competition’s total cost—even though their acquisition price is cheaper. Use money as your argument. For example, “If your real concern is money, that’s exactly why I suggest you take another look at our solution.” At this point elaborate on all the back-end value that goes into your solution. Notice that I used money not price in my response. It’s important to turn price into a bigger issue and that bigger issue is money.
Invoke empathy by tying your response to something with which the buyer can identify. “Like you, we made a decision a long time ago to compete on the quality of our solution, not on our price. We lose a little business because of this every year but we gain a lot more than we lose, and we hope that’s the case here.” This works well with the buyer who competes based on their quality. At a gut level he understands where you’re coming from.
Reassure the buyer. Paying a higher price is risky for your buyer. Reassure your buyer that it’s okay to pay for greater value. For example, “Mr. Buyer, many of our customers have asked why they should pay more and this is what they’ve discovered . . . ” Here is where you support your price with testimonial letters, customer satisfaction data, or any other proof source that reassures the buyer.
Use your guarantee or warranty. Stress the positive aspects of your guarantee, not the remedies. Do you think the buyer wants you to give her money back? No! Why would she want to waste her time and resources on that type of a remedy? What the buyer really wants is reassurance that she is going to get exactly what she needs and then some. The guarantee or warranty is a good way to reduce risk.
Give it back to the buyer. This is one of the most unexpected yet powerful techniques that you can use in dealing with a price objection. For years salespeople have convinced buyers that if they don’t buy now something negative is going to happen. With this response, I propose the opposite approach. When the buyer says, “I don’t know. The price is higher than I want to go,” try two or three ways to deal with it. If nothing works, offer this response and watch the expression on the buyer’s face. “Do you really need to say ‘No’ to our price right now?” I guarantee they will raise their eyebrows.
“No, not really,” is how they generally respond.
“Well then, let me offer this suggestion. Why don’t you think about it for a few days and make sure that when you say ‘No’ to our price, you understand that you are also saying ‘No’ to everything else that we’re bringing to the table.”
This shift in momentum will catch the buyer so far off-guard that you will be able to resurrect what appears to be a dead sale. The last thing the buyer expects is your telling him to think about it. Encourage the buyer to take the time to make a good buying decision.
Price objections are a daily reality for salespeople. Those who are better prepared to deal with them than the buyer is to present them will hold the line on their prices and sell more profitably.
Author byline: Tom Reilly is a professional speaker and author of twelve books. Tom is literally the guy who wrote the book on Value-Added Selling (McGraw-Hill, 2010), the book that started the value selling revolution. For more information on Tom’s presentations, training, and products, visit his website www.tomreillytraining.com or call his office, 636-537-3360.