Price is the monetary value of the product or service we sell. It represents what our customer is willing to pay for the solution to the problem they are trying to solve. When the price is higher than the value the customer expects then we get the price objection.
For most products, the marketplace sets the price a customer will pay to exchange their money for the good or service you are selling. For mass-marketed consumer products, competition limits the price for a product. But for unique one-of-a-kind solutions, the value of the benefit of solving a problem drives the price. When we understand the value/benefit relationship we don’t get the price objection.
Should You Move On?
What’s a salesperson to do when they get to the close and the customer thinks the price is too high to pay? Or the customer says: “I can get this for less money from your competitor.”
One approach could be to pack up your brief case and thank the customer for their time and move on. Then look for their reaction. If they are happy to see you go, move on to the next prospect. But if they are uneasy that you are pulling out, it’s probably a strong signal they want to work with you but need help in justifying the price. Great salespeople are strong enough to walk away from a bad deal.
Or Start Over?
If you choose to try to overcome the price objection, begin by again reviewing the problem they are looking to solve. How much is that costing them? If they use your solution, how quick is the payback? Is there added value by using your solution, your company, and you that they can’t get elsewhere? When presenting to a decision-making group, find out who is driving the price objection and what their motivation is. Great salespeople dig for the root of the price objection.
What’s Your Advantage?
Let’s say you are selling a part to a growing manufacturing company. Their current supplier can’t keep up with their demand. So they are looking for a second source. The part you are selling is suitable for the application but it is 10% more expensive than the current supplier because they are only buying a small quantity from you. To meet their demand you have agreed to have a guaranteed stock level at all time. And you can ship in one day compared to three days from the current supplier. All this adds a level of comfort to the buyer and the added value of not running out of the part and shutting down production would exceed the additional cost. Plus you can offer a volume discount for larger order quantities that would reduce the price difference between the buyer’s sources. By creatively thinking through the customer’s need, great salespeople overcome the price objection.
Avoiding The Price Objection
The key to avoiding the price objection is to know what value your product or service adds to the customer’s business. When you have been talking value and benefit compared to their budget all along through the selling process, then the price objection rarely happens at the close. The best salespeople have nailed down the price expectation before the closing presentation.
What You Can Do Right Now About The Price Objection
- Be confident in the value you bring to the customer
- Make sure you discuss budget early in the sales process
- Have a creative solution the problem
- Walk away from a bad deal