When a prospect says they want to buy, but they don’t like the price, you need to know why they are objecting. To avoid price objections of your product, you need to know if it’s really a price objection. Does “that looks more expensive than we expected” mean that price is a problem or is it quite an obviously polite way to say:
- We can’t decide what we really want, so everything seems expensive.
- That’s 25% more than the amount I have left in my budget for this quarter.
- I’m nervous about making this decision wrong, so I’m trying to postpone or kill it.
- We’re about to reorg, so I’m just working to make this go away until the dust clears.
- I’m trying to save some money to take my team to a conference in Spain.
If those prospects were never really in the market for your product, this is a positioning failure. Take measures to avoid wasting time on conversations that cannot be profitable. If you’re dealing with someone who is utterly not in the right position, politely recommend some better alternatives and take action to position better.
Next, you want to know if the price is a real problem. When prospects don’t feel comfortable with a buying decision, they usually say that price is the problem, even though, consciously or not, there are other issues catching up the sale.
When the prospect says, “It is too expensive..” is the prospect saying that currently, they don’t have enough funds in the budget or in the bank to cover the cost? Is the prospect saying that if he wrote a cheque, the bank would return it unpaid? Or is the prospect really saying, “Your product or service is not worth the money?”
These are tough questions that you need to ask yourself…but it is critical that you understand the real problem in order to solve it. Many salespeople use the economy as an excuse for poor sales interactions that don’t build enough value. So be honest with yourself.
A price objection is about the value and while we have another audio session dedicated to teaching specific ways you can add value to your product or service in a sales interaction, in this session, we’re going to explain strategies on how to add value in specific areas to avoid the price objection.
First, let us give you two specific strategies to use during your sales interaction to avoid the price objection more often.
Strategies to Avoid Price Objection
When you do a sales presentation, by the time you are done the prospect should be thinking that your product or service is far more expensive than what it is. When the prospect hears your price, they should think, “Wow, that’s cheap. It’s a bargain.”
So here are two techniques to help you achieve this during your sales interaction.
1- Be proud of your higher price and mention it throughout the interaction
Be proud of your higher price. You should be proud that your product is all about quality and how your company aims to spare no expense in producing the very best. Mention that high quality equals higher cost.
And do this even if your prices are lower than your competition—talk about quality and that your company spares no expense to get that quality delivered as your product or service. We’re not saying that you misrepresent the facts. Just talk about the huge investment your company makes in what you sell and therefore you are not selling at a low price.
Here are some samples of sales talk to better explain what we mean:
“Michael, our main plant is in Hyderabad. We’ve upgraded all of our equipment and we maintain the latest software and processes. It costs a lot, but we are a quality conscious company and more concerned with customer satisfaction than with bargain prices.”
“Rajat, all of our instructors have a minimum of five years of real world experience. They cost us a lot more than those kids fresh out of university, but our clients feel they are more than worth the higher rates…”
Talk about quality and high prices throughout your sales interaction.
2- Build the value of the problem
You need to build more value into the problem. The primary reason you get a price objection is that the product or service isn’t worth what you ask for in the mind of the prospect. The primary reason this occurs is that the problem or pain that the product is supposed to solve is not that important or painful
In other words: the bigger the problem, the more valuable the solution. The smaller and more insignificant the problem and the pain, the less valuable the solution.
So let’s look at it this way, would you buy a gigantic champagne bottle cork, right now? That’s right. Let’s say I had a huge, ten-foot cork, would you buy it for, say, $70? No? How about $30? $5?
No. But what if you were shipped wrecked in the middle of the Atlantic Ocean? Would you be interested in a big giant cork then? Not only would you be interested, but you’d gladly pay a million pounds! The problem dictates the value of the solution. The greater the problem, the greater the solution.
When you get a price objection, you do not demonstrate to the prospect that the problem they have is costing more than the solution and therefore, the solution costs too much. Does that make sense? You must raise the value of the problem and here are a few ways to do that:
First, you must identify and magnify the problems and the pain. You must uncover the pain and problems the prospect is having and intensify them. If you have difficulty doing this, please listen to the audio session on asking questions to unearth the prospect’s problems. Asking the right questions to uncover problems is a critical part of the sales interaction.
Now, once you have identified the problems and the pain, use these three steps:
- Be slightly shocked and surprised
- Get serious and concerned
- Get the prospect to apply a monetary value
Ok, let’s look at each step:
The first step after you have identified the pain and problems is to become a little shocked. We’re not talking about acting here. You should be shocked. The first time you saw your product in a sales interaction and saw the great benefits it provides and witnessed the considerable problems prospects have without your product you were surprised. But now you’ve seen these things dozens or hundreds of times and the freshness has worn off. Well, remember that the prospect has not seen this before.
Be astonished that this prospect is losing so much money, that this person is suffering so many losses, that this company is losing so many sales.
Now, the second step when discussing a problem the prospect is having is to be very careful of your attitude; your demeanor, as well as during the first step. Huge mistake salespeople make– -even the experienced pros—is to be a little animated, or enthusiastic when discussing the prospect’s problems. When salespeople notice that the prospect has a huge problem and therefore a great need for the product, they tend to get a bit excited. But this is a mistake.
You’re talking about something that is costing this person or company money, valuable time, pain. You’re talking about something that is hurting this prospect in some way.
You should not be happy and excited about that!
You should be showing concern and compassion. Also, the more lighthearted your attitude is, when discussing the problem, the less serious the problem becomes. When discussing the problem – the pain – it gets serious. Show concern.
Step three is that after identifying the pain you should get the prospect to assign a number, a monetary value or cost to the problem. Now, depending on what you sell, this may not be possible but still get the prospect to assign some value to the problem. Narrow the scope of the problem and define it clearly.
If you do these three steps exceptionally well, usually the prospect will ask you to rate the problem and the pain that they are facing to other customers that you deal with.
Now all of that may sound like a long undertaking but it’s normal and it flows.
Listen to this example:
Salesperson: “So, Harsha, you’ve got 300 servers and your team members have to go to each one, individually, and personally reset the accounts and they do this almost every day!? Damn. How much does that cost you?”
Prospect: “I don’t know exactly.”
Sales Person: “I’d say. That’s err, um…. Well, you said you have 10 techs and each handles 20 servers, so how much time would you say they spend per day on each?”
Prospect: “Only about 5 minutes.”
Sales Person: “Ok, so each techy takes 5 minutes.. times 20 servers… so about 100 minutes a day, times 5 days….so you’re saying they spend over 8 hours a week or the equivalent of an entire day, Harsha? That’s about £240 per week per techy….Harsha……..that’s over 12 grand a year! times that by 10 and your whole team wastes the equivalent of £120,000 a year just by resetting accounts!”
Prospect: “So is this the worst you’ve seen, the most waste?”
Sales Person: “Well…no, I’ve seen worse. But it’s up there.”
So, when building the value of the problem, remember to be a little surprised and get serious and then get the prospect to apply a value to the problem.
To help avoid a price objection, during your sales interaction you want to boast about quality and price throughout, and you have to magnify the value of the prospect’s problem and pain. Now, you need to relate the problem and pain to the prospect’s peers—and do so immediately.
Let’s assume that you’ve just finished demonstrating to the prospect that they are losing or hurting badly in some areas. You were surprised at the prospect’s situation. At this point, the prospect is not feeling very good—which is what you want. You must get the prospect of becoming uncomfortable about their present situation.
However, you do not want the prospect to begin to feel as if they are the only person in their position with this problem. When the prospect begins to feel as if they are the only one suffering from this problem then two things happen:
- The prospect feels ignorant and goes on immediate defense
- The prospect begins to disbelieve you and goes into defense mode, denial, and distrust
You do not want either of those outcomes. So, after the problem, let the prospect know that their peers suffer the same problem—a problem that you have solved for many of those peers!
Let’s go back to the last example and add this to the last step.
Salesperson: “Well…no, I’ve seen worse. But it’s up there. Harsha, you’re not alone. Most IT departments in companies of this size have a similar problem. I specialize in working with directors just like you, and have helped them solve this problem quickly and efficiently…”
So, start talking about quality from the outset. Then increase, magnify and intensify the value of the problem, and finally relate the problem to other customers in the prospect’s peer group.
If you follow those steps, you will rarely get a price objection.