Sales

Price Objections: What to Do Before You Sharpen Your Pencil

One of the most vexing issues facing salespeople is how to win a sale when their solution is not the lowest-priced alternative available to the prospect. Some of them positively dread the moment in the sales cycle when the buyer says: “We like your product, but we can get the same thing cheaper somewhere else, so you’re going to have to sharpen your pencil if you want the deal.”
Often when that happens, the salesperson goes into high-gear selling mode—but this time they target their manager, trying to get a pricing exception to win the business.
Although there are no foolproof ways to defeat the price objection, there are so many avenues available to you that discounts, if any, should be a last resort. It’s such a big topic that I’m going to break it up into a series of articles, but let me start the discussion by addressing the psychology of pricing, as it affects the mind of both the buyer and the seller.
The most important step to addressing—and even welcoming—the price objection is to reframe in your own mind what a higher price means. Often the best defense is a good offense, but first it requires that you shift your thinking to view a higher price as a strength rather than a weakness. Too many salespeople assume the burden of justifying their higher price, when instead they should shift the burden onto the competitor, to justify their lower price. Their message to the buyer should be: “Instead of asking why my price is higher, ask yourself why their price is lower.” Let me explain…
We live in a free-enterprise system, where the market determines an accepted price for anything offered for sale. Sellers want to maximize profits, so they will sell their product at the highest price they can get in the market. If your competitors are asking a lower price, it’s because they have learned that the market does not value their product as highly as yours. Buyers have voted with their dollars and their verdict is that your product is worth more for some reason.
As a result, the old adage, “you get what you pay for”, is deeply embedded into a buyer’s psychology and common sense. The relative price of anything sends a powerful signal about its quality. Regardless of whether the signal is accurate or true, our minds can’t help but interpret it in that way. Suppose you go to a store and want to buy a widget. There are two widgets sitting side by side: one is $10 and the other is $15. You don’t know enough about widgets to choose, but if you’re going to choose the less expensive one you will at least wonder what you’re giving up by paying a lower price.
There is always going to be at least a residual feeling of risk in the buyer’s mind when they consider the lower-priced alternative. You can bring some of these risks out in the open directly, by pointing out actual differences, or you can ask questions to get them to think their own thoughts about potential risks and costs of choosing the “cheaper” alternative. (Just using the word “cheaper” evokes powerful connotations in the buyer’s mind.)
Of course, this won’t work if there is absolutely no difference between your solution and the competitor’s—if it’s a true commodity. There has to be some perceived difference to give you a grip on the price issue. In the next article, I will demonstrate that nothing is a commodity to a good salesperson.

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June 26, 2014
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