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How to handle price objections

As sales professionals, price is one of our biggest concerns.

You hear the knee jerk reaction from most customers: “If you charge me less, I’ll make more money.”
That’s the easy way to look at it. It’s our job, as sales professionals, to gauge that, and discredit that level of thinking. We want to take them from a cost focused transactional view, to seeing it as a value focused return on investment.

How do you do that? By educating our prospects throughout the process.
This isn’t news, but people now have a lot more information at their fingertips because of things like Google – and the sales profession has not totally caught up with this reality yet.

Before we walk in the door, prospects have better questions, they’re more knowledgeable buyers. They ask better questions, they’re focused on different things. Sometimes things that are relevant, sometimes things that are not relevant.

They are more aware of their options, who our competitors are. There’s pricing out there on the Internet before we walk in the door. We say: “Never quote price until you establish value.”

Those are words to live by. Yet the Internet has thrown us a curve ball because now some salespeople are quoting price in order to get a foot in the door. “Well, let’s just throw out a price there, and if they bite on it, we can get a foot in the door and then we can work at increasing our margins throughout.”

That’s a strategy. But you have to decide: Do you want low-margin business?
The overall goal of sales is to establish mutually beneficial, valued, sustainable, profitable, decent-margin business. The key there is mutually beneficial. So we have to understand:

•    What are our customers really looking for?
•    What do they consider beneficial to them?
•    Do you know that or do they know that?

The Internet has driven nearly every business toward commoditization. We’re like lumberjacks: We’re going out to the forest to chop down those trees and there’s fewer trees and more lumberjacks. The trees are hiding behind voicemail and email. They say, “E-mail me a proposal, give me a bid.”

Now personally, in my business, that e-mail does not get an e-mail response. We will go out of our way to track down the person who sent that e-mail and do our absolute best to engage them in conversation. It’s that conversation, and the questions that ensue in that conversation, that we believe will differentiate us from all of the others. And that doesn’t happen in an e-mail response.

Again: Never quote price until you establish value.

And it’s very difficult to establish value on a blind RFP. Now you might say, well, that doesn’t always happen with me. Sometimes it comes as a reference. Sometimes another happy customer refers them.

Do not get caught up in the trap of quoting price before you have an opportunity to establish value. In referrals, two of the biggest fears that the customer has previous to buying is:

Number one, will I pay too much?

Number two, will the product or service live up to my expectations?

When you get a referral, those two fears should be removed because whoever referred you is already using you or your product or service, and has stated those things are not the case.

However, you still need to connect with the buyer. You still need to identify their highest value needs. You still have to identify what their challenges have been in the past, where they want to go in the future, what their concerns are. Those things cannot happen in an e-mail.

We’ll discuss more specific strategies for dealing with price objections in our next few posts.

Photo by melanieburger via Creative Commons 2.0