“Price, Price, Price.” Ask an average sales person what the top 3 issues they face are, and that’s usually the answer you’ll get. Price is regularly the first thing that client’s bring up, and it causes a lot of fear and anxiety in the mind of most sales reps.
When you break it down, price is fairly simple of an issue, but you have to first figure out WHICH price issue you have, before you can address it.
Issue 1 – No money. Please don’t refer to this one as “no budget”. No budget means I have not allotted any funds to this problem. No money means I have no funds to allocate…either because I have no money, or because all my money is spoken for for things MORE important and MORE urgent than the issue your solution fixes. Issue 1 is rare, very rare, but often used as the scapegoat. I say this with confidence, because in the sales training and consulting world, almost no one ever budgets for us, yet we get a lot of buyers. So it is very important to make sure we really identify issue 1 only when it is actually the issue. If a business is behind on rent and payroll, they are NOT going to buy your widget. If they say they do, they are likely not going to pay the invoice. You know why? Because they don’t have any money.
Issue 2 – Not enough value. When the need you are addressing just isn’t severe enough, the price question will come out early and often. No one wants to pay $500 to fix a $5 problem. It does not matter how perfect your solution is, how cool it looks/runs, and even a 50% discount isn’t going to help. The value equation is off, and they are reflecting that by asking a price question based off of their previous experience of the value being off on this subject. I love the idea of solar on my house, but every conversation I’ve had has shown me that the bang for the buck just isn’t there. So yeah, when someone pitches me solar, I am going to ask the price, because I already know the value variable (my current power bill).
Issue 3 – Not enough awareness. The mistake I often see made in sales, is assuming that the client sees the issue and the true cost of the issue, just because we see it. This is a frustrating pain, because sometimes we can so clearly see that the ROI is there, but the client is still beating us up on price. Your inner brain is seeing the problem clearly, and hence assuming they see it as well, because they are closer to the problem than you are! That’s the real challenge. Someone living in their business day to day can easily lose the forest for the trees. It happens all the time.
So how do we identify and address these issues?
First disclaimer here: If you are selling a commodity (gold, oil, eggs, etc) and there is a clear market index on what that commodity is worth, then most likely you are not going to be able to leverage anything in this article. Either someone is over discounting, or you are over pricing and that’s a harsh reality that doesn’t change with any tactic.
When facing a price challenge, I do the following:
– I assume it isn’t issue 1. Firstly, I can’t ask them if they are broke (and even if I could, what are the chances they are going to admit it to me?), and second, I should have done a proper job of qualifying so that a company with no money isn’t on my list to begin with. If no money is the issue, it will come out quickly in the conversation, but I assume it is not.
– I ask questions around the issue to get a sense of how aware the decision maker is of the circumstances and challenges. I’m fishing for one main info point. Is the DM directly involved or is someone else also involved? I’ve won many deals by being able to bring in the person who was directly affected by the issue into the conversation. It’s frightening how often the main DM was not aware of the true impact of the issue that my service fixes. No awareness of the pain might as well be no pain, because their perception is their reality.
– I share the math either way. That means that if the cost of the problem doesn’t justify the price of the solution, I say it before they do. The debate occurs on getting the right pain out and agreed to, not on justifying an expensive solution to a cheap problem.
To summarize: An early pricing question is a sign of fear from the client. You need first and foremost to understand where that comes from.