Sales Consulting & Sales Training: Picky about Pricing

Dealing with Price Concerns

We’ve all seen customers display their apparent “horror” at quotes or proposals when their “perception” of what something should cost runs into the reality of what something actually does cost.  Pricing objections are awfully common and they can show up early in the sales process (before someone even starts working through the sales cycle) or during contract negotiations. Some customers truly have limited budgets to work with while others will try to nickel and dime you to save as much money as possible. Price is a real objection and one that can be overcome if handled properly. Even when the customer does not come right out and mention price, it is relatively easy to spot. Here are some sample price objections:

“That’s just a lot more than we were planning to spend right now.”

“We have a big expense management initiative taking place in the company.”

“This is much higher than what other companies have provided me.”

“You know, these are tough times.  I don’t know that I can justify this kind of expense.”

“That’s much higher than what we’re used to paying.”

“This one proposal will wipe out our budget for the rest of the year.”

When price, return on investment, budgets, expense management and money are brought up, you’re ultimately dealing with the price. Customers throw out price objections most often because they’re uncertain whether the price they’re being quoted is the best possible price. In some instances, they have an unrealistic idea of what a product or service may cost.  Based on their “estimates”, they think a product or service may cost X when it truly costs twice as much.  Justifying price using benefit statements, product demonstrations, customer referrals/testimonials and other materials will reduce customer concern. Providing a cost benefit analysis can help overcome the price objection before it is even brought up. If a customer doesn’t see the value in a product or service, price is the easiest objection to use.

As mentioned with other objection types, reframing is the best way to deal with objections related to price. 

1. Question your customer to understand their reasoning or to determine if they are open to discussing your product or service
2. Reframe the objection via close-ended questions to put them back in the right frame of mind
3. Compare possible risks or benefits or use a FAB statement to provide contradictory evidence or missing information
4. Question acceptance using closed questions

Here is an example of how this process works:

Customer: “I don’t know… this is awfully expensive.”

Sales Rep: “Can you give me an idea of why this is too expensive?”

Customer: “It was my impression that the cost was much lower.”

Sales Rep: “When you say, ‘much lower’, what exactly do you mean?”

Customer: “At least half of this amount… this is much higher than I expected.”

Sales Rep: “Are you sure that the cost you had estimated was for a similar service?”

Customer: “Well, they didn’t quite provide as much support as does your team.”

Sales Rep: “You know, in speaking with Teletron, they had the same concern. They also felt the price was higher than what they had seen in the marketplace. Once we showed them how our data hosting service not only includes standard hosting capabilities but also 24x7 database administration and tuning services, they realized the overall cost savings in reduced downtime would far exceed the initial investment.”

Don’t lock up when the buyer brings up pricing. Do some digging to find the real concern behind their objection. Determine if their objection is based on solid data, comparable products or services or simply smoke and mirrors. The best way to get to the bottom of your client’s situation is to ask questions. 

Practice preparing questions based on what you hear every day in the field:

“When you say that the proposal is too expensive, are you factoring in that other companies add equipment and materials fees on top of the initial cost whereas ours are included in one flat fee?”

“As you consider the costs, have you taken into account the added investment of adding internal customer support?”

“Have you considered the additional expense to the plant if you don’t have maintenance performed by the end of the month?”

“Have you factored the added finance charges that standard agreements charge that we have waived?”

“What would be the long-term result to your already decreasing efficiency if the additive was not used?”