How to Respond When Customers Challenge Your Price

By Paul Reilly

Price is only an issue in the absence of value. When customers challenge your price, they’re really challenging your value. Instead of cutting your price, reinforce the value of your solution. In a recent Value-Added Selling seminar, a participant shared this compelling example.

The sales rep received a call from an operations manager needing a piece of rental equipment. The sales rep scoured their inventory and found the equipment in Southern California, however, the customer was in Northern California. The sales rep shared the news with the customer. The customer uttered the most sought-after words in sales, “Get it here. I don’t care what it costs.” (Side note: Customer desperation is never permission to rip them off. It does, however, mean no discount.)

The salesperson quoted a fair price and coordinated delivery. The sales rep met a colleague halfway down the coast to get the equipment. The equipment was delivered on time and the operations manager was thrilled.

A few days later, the procurement manager called the sales rep and questioned the price. He said the price seemed high. The sales rep explained the short notice and the expedited delivery, but the procurement manager still challenged the price and asked the sales rep to resubmit the invoice. The sales rep resubmitted his invoice, but he did not cut his price. Instead, he informed the buyer of the effort and sacrifice that went into delivering the value.

He added this additional line item to the invoice:

Missed a family meeting at my 7-year-old child’s school to deliver the equipment.

The procurement manager paid the invoice no questions asked.

Boo-yah! This sales rep deserves a standing ovation.

Now some of you might think that his additional line item was too direct, but it was not. Again, when buyers challenge your price, they’re really challenging your value. They don’t believe it’s fair. Customers need a perceived sense of fairness to consider the exchange valuable. They must see the energy, effort, and sacrifice that went into delivering the value.

This story exemplifies a challenge that salespeople face daily. In many organizations, procurement is siloed from operations. The operations manager experienced the sales rep’s outstanding service and directly benefited by getting his job site back on schedule; the procurement manager did not. As the distance between procurement and operations grows, so does the distance between outcomes and price. Procurement is typically too far from the outcome and too close to the price. The operations manager was buying an outcome—get the job site back on schedule. The procurement manager was buying equipment.

Procurement has a myopic view where they focus on price instead of the value delivered. Therefore, you must inform procurement of the value added. When any buyer challenges your price, it’s necessary to remind and reinforce your value. If a customer challenges your price, identify all the ways you bring value. Then, remind the customer of your value and the impact it’s had on them.

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2019-06-10T14:10:53-05:00