“What do I do when my customer says our price is too high and that they can get what I’m selling for less elsewhere?”
I’ve been running sales workshops for over fifteen years and without fail, this question comes up in every session. In the most recent case, I had reps from two companies who resell the same product who discovered together at my workshop that their customer had been playing them off each other: each having been told that the other was priced lower!
Pricing objections are never the problem: they are a symptom of a problem.
When a customer balks at your price, they are telling you something important. They point to incorrect assumptions that have been made: either about the value of the product you’re selling or, about the sales strategy you’re using.
You can overcome pricing objections by implementing the following four-step process.
Step 1: Understand what they are comparing
Make sure you have a clear understanding of what your customer is comparing your product or service to in the marketplace. If it’s an apples-to-oranges comparison in the mind of your buyer, then you don’t have a pricing problem, you have a product compatibility problem. Go back and take the time to re-examine what your customer values most and then ask yourself whether your features and benefits are in alignment with helping them achieve their goals and objectives.
A few years ago, Apple drew a bit of criticism from industry observers who felt the company was missing out on the netbook market: essentially small, cheap laptop computers. The company resisted, saying that type of product had nothing in common with the market they served. Apple insisted their clients did not want cheap, reduced function computers. Instead, they doubled down on their full service tablet offerings, making it abundantly clear that there was no comparison between these two products and therefore, price (a cheap netbook vs a more expensive tablet for their market). They were right, and the tablet market soared
Step 2: Find the differentiator
When your client understands that the products they are comparing are similar and can meet their needs, you need to find a compelling differentiator for your offer. Here are few strategies that my clients have implemented successfully:
- Use research-based evidence. Highlight the results of a scientific study that supports the claims you are making about your product.
- Make better use of references. Leverage the power of word of mouth and client testimonials to make the case for why you are selling the superior product in the market.
- Highlight experience and expertise. It means something important if you are the more established manufacturer or service provider in your market. Define what that means and why it’s important to your customer.
- Leverage community support. One client of mine who serves a local market makes a point of hosting an annual fundraiser that donates over $150,000 to kids’ cancer charities. For some, proof of that kind of commitment to community makes all the difference when making a buying decision.
There are other strategies, too: ease of use, access to services, support for local community, training, depth of consulting and after-sales services. Anything unique that that sets you apart.
Step 3: Offer payment options
What do you do if your client still won’t budge—even after you’ve differentiated your product and have checked how they are comparing it to others in the market? Take a look at how to make it easier for them to pay. Make it easier for them by offering payment options. For example, one of our clients offers split contracts: pay half in the fall and half in the spring. You can also consider offering monthly billing for services agreements, or a scaled-back version of your product or service, in which some of the added value is taken away. This can sometimes result in a boomerang effect, in which the customer recognizes they are not prepared to give up those extras to save a few dollars. Whichever options you choose, do so with the understanding that your decision is meant to boost sales while maintaining profitability. You need both, otherwise you’re losing money.
Step 4: Know when to walk
Walk away gracefully! Always live to fight another day. If you can’t come to an agreement on price after negotiating, be the first to walk away. Shake hands, thank them for considering you and promise to follow up. Remember: you can’t sell to everyone. It’s better that you only sell to those that will be happy to do business with you, while being profitable for you.