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“Too Expensive?!?!” 5 Ways To Handle The Price Objection

By: devops

Salespeople who don’t work for the low-cost provider in their arena often struggle with losing deals based on price. Prospects are only human, and no one likes to pay more when they could pay less.

While there are certainly steps you can take to win against a low-cost provider, you’ll never come out on top with a poor product. If your product is only marginally better than your competitor’s but costs significantly more, you’re going to lose deals. It’s just that simple.

However, if your product’s price reflects significant points of differentiation, you can come out on
top. Here are five tips to get prospects to sign on with you instead of the low-cost competitor in your space. 

1.  Ask about the competition early.

A mistake I see all too often is reps waiting too long before asking about the competition. Especially if you’re selling a premium offering, you want to ask buyers about what other vendors they’re considering early and often.

But questions such as “What do you like about Company X?” won’t garner you valuable information. Instead, probe into the following areas:

  • “Which vendor is winning as we stand today?” Get the buyer used to thinking in terms of “winning” and “losing.” This will reveal which provider they ultimately prefer — regardless of price. Remember: Prospects will never buy from your company unless they like you more than the competition. If you’re not “winning,” price becomes a moot point. If you are winning, you can work on the price.
  • “Where are you in the buying process with competitor X?” Make sure you’re keeping pace with the competitor’s sales process. Alternatively, this can alert you to situations where you’re being used as a last-minute entry to justify the decision.
  • “Who is the internal champion for competitor X?” In order to neutralize objections to your product from stakeholders, you have to be aware of them in real time. Discover who’s rooting for your competition, and reach out to them directly.

2. Eliminate poor quality competitors.

Let’s say you’re in an RFP process with two other vendors. Vendor A is a low-cost, low-quality product. You rarely lose deals to Vendor A. On the other hand, Vendor B is a competitor you bump up with quite frequently, and have lost deals to in the past.

In a three-way heat, you want to help your buyer eliminate one option as quickly as possible. Which would you ax?

Most reps would say Vendor B because they have a greater likelihood of winning against Vendor A. But this is actually the wrong answer — I would rather stand with Vendor B. Why? Because you then put yourself in what buyers consider the pool of quality.

If you can convince your customer to get rid of poor quality options early on, you’ll find you strengthen your sales argument later in the process — and you won’t be faced with struggling to match crazy low prices.

3. Get the number.

As the buying processes progresses, you might be asked to talk discounts. There are a number of proven tactics to justify a higher price — calculating ROI, emphasizing value, etc. But when push comes to shove, sales reps need to get buyers to say the number they’re looking for instead of blindly throwing out prices.

First things first: I never offer a discount unless I know for sure that my company is “winning” in the buyer’s mind. Once I have the prospect’s assurance that I’m in the lead, we can talk price.

Prospects often try to play vendors against each other on price, saying things like, “Well, we like you guys better but Competitor X costs 25% less. If you can match that price, the business is yours.” As soon as they hear a sentence like this, most sales reps go running for their manager’s approval.

But this isn’t the only way. Here’s what I would recommend instead:

Buyer: “Well, we like you guys better but Competitor X costs 25% less. If you can match that price, the business is yours.”

Sales rep: “How did you get that 25% number?”

Buyer: “That’s what Competitor X told us was their price.”

Sales rep: “Well, you know we’re not going to match that price, so what’s the real number you want to see from us?”

Think about it this way: Mercedes isn’t going to compete with Honda on price. Similarly, you shouldn’t compete on price with a clearly inferior product.

So before you start negotiating, you must prevent the buyer from using the competitor’s price as a baseline, and get them to commit to a realistic number. After all, there’s no comparison between the two products — and that holds for price as well. Make this crystal clear to the buyer, and negotiate from there.

4. Surface stories of how low-cost products let the company down.

If a decision maker buys a product based on price alone, it’s safe to say that’s not a very good choice.There’s a reason why low-cost providers are cheap — they also tend to be inferior to other products.

Early on in the sales process, get your champion to tell you stories of when decisions made solely based on a low price tag negatively impacted the company. Everyone’s bound to have a few. Then, when the sales process is wrapping up, you can remind the buyer — with their own words — that choices made to save money often end up costing money. They can’t argue with themselves.

5. Use the trial close.

Prospects often want to talk discounts before they’re ready to sign a contract. But the rep who starts the discounting conversation too soon often opens a can of worms.

Whenever a prospect brings up discounting with me, I present a trial close. Here’s an example of what I mean:

Prospect: “I’d like to talk about discounts. What can you give me?”

Sales rep: “Well, Prospect, if you and I can come up with a price that works for both of us on this phone call, I’d be happy to send over a purchase order today.”

At this point, the buyer usually backs off:

Prospect: “Oh. Well … I don’t think that would work right now.”

Sales rep: “Understood. Well know that I am open to the conversation, and the moment you’re ready to buy, we’ll talk discounts.”

By saying this, the rep makes it clear they’re not going to negotiate unless the buyer is ready to close right then and there. This prevents you from discounting twice with different stakeholders and ensures you only discount when a buyer is 100% ready to buy.

Using these five tactics, you can help your buyer justify spending a little more for a lot more quality. With these tricks up your sleeve, you’ll never use “my product just costs too much” as a reason for a lost deal again.

Happy Selling – Jeff

This blog originally appeared on LinkedIn.  Click here to comment.

Want more? Come meet me in person this spring I’ll be teaching my proven techniques for prospecting, negotiating and closing in Boston on June 12th for our public workshop series. Learn more

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