- Blog post
Here’s a way to win that sale – without cutting your price
When customers say, “Your price is too high,” what are they really saying?
Many salespeople hear: “If you cut your price, then I’ll buy from you.” So they move heaven and earth and come back with a price no competitor could possibly match.
The customer says, “Golly, that is a good price. However, we’re going with the Acme Company. They’re a little more expensive, but we think we’re getting a better value.”
When customers complain about price, the best solution usually isn’t to lower the price. Because more often than not, the price tag isn’t the only – or even the primary – obstacle standing in the way of your sale.
Instead of conceding on price, a better approach is to understand what the buyer really means by the objection and respond accordingly. Here’s how:
First, clear the decks
Before addressing price resistance, make sure it’s the real issue – and the only remaining obstacle. Nervous buyers often use price to conceal their uncertainty or to avoid talking about other issues.
Try this: “Sam, I believe that if we want to do business together, we’ll find a way to work out the details. But just to be sure: Is price the only problem we need to solve? Or do you have other concerns as well?” If Sam hems and haws, defer the price discussion until you address all other objections.
Next, define “too high”
“Your price is too high” can mean one of three things:
- Your price is higher than I can afford to pay.
- I can get something similar for less.
- Your product or service is worth the price, but not to me.
These are three very different problems, even though they’re all expressed as price resistance. Once you’ve found out which problem you’re facing, you can pursue an appropriate solution.
‘I can’t afford it’
Assuming your customer has been qualified, affordability is more about how they pay than whether they can pay.
Consider alternative payment structures, such as extended payments, billing across two budget years or phased implementation. Also look for other funding sources. For example, new equipment will reduce maintenance costs. Can some of the maintenance budget be used to fund the purchase?
Or look for ways to scale back your proposal while preserving value – for you and your customer. You can do that by knowing the customer’s priorities and your own cost structures. Armed with this information, you can revise the proposal on the spot – while your competitors are still back at the office crunching numbers.
‘I can get it cheaper’
This version of price resistance means you need to do more to differentiate value.
The best way is to study your competitors’ pricing strategies so you can educate buyers about what they’re trading off: “Susan, Acme does offer a lower price on the front end. But here’s what you’ll pay for their spare parts versus ours.”
‘It’s more than I need’
This response is a sign that you might have moved too quickly to propose a solution, before you fully explored the customer’s needs.
If you have a less expensive solution more in line with what the customer wants, great.
Often, however, the higher-value solution is to uncover and quantify additional needs. That will help you win the sale today, and ensure long-term satisfaction for your customer.