What do you do when a client asks you questions like “What’s your price?” or “Can you give me a discount for this product or service?” If you’re like many other salespeople, you may not know how to answer. In fact, 35% of sales teams view price objection as one of their biggest challenges.
However, as long as you have the right tools, price negotiations become much simpler. Let’s take a look at how to negotiate price, so you can successfully sell at a higher price than your competitors while retaining and growing your client base. Additionally, we’ll dive into pricing mistakes you should avoid so you don’t have to lower your prices while closing deals. The right customer service can make all the difference.
Why You Shouldn’t Discuss Your Client’s Budget
Asking your clients for their budget puts a ceiling on how much they’ll spend on your product or service. If your offer goes beyond their budget ceiling after they’ve already stated their budget, it becomes a hard fight trying to get them to raise their funding to meet your price point. It’s much better to spend your time describing exactly how your product or service will make their lives better.
Instead of inquiring about their budget, focus on discussing any problems with their business and current provider and how you can help them solve those issues. This focus on remedying their current situation switches the conversation. Now, it’s not about getting them to buy — it’s about encouraging them to invest in your company because you have the solutions they need.
However, price will inevitably come up in talks about your product or service. While you’ll be able to convince some clients simply by talking up whatever you’re offering, you’ll also encounter clients who view finances as their top priority. That’s when it’s crucial to have a few strategies under your belt.
Strategies When Discussing Business Pricing
How do you discuss pricing with your prospects without sending them running into the arms of your competitors? Discussing the features and benefits of your product and services alone won’t always close the deal. You must get your prospect to see how your product or service is worth every cent so they agree to your price.
Here are 10 price negotiation strategies to help you reduce price objections and close better deals.
1. Ensure You’re Talking With the Decision-Maker
Start by ensuring you’re talking with the person with the buying power. After spending time nurturing a prospect to get to the decision-making stage, you never want to hear them say, “Let me speak to my boss.” Shorten the sales process by seeking the decision-maker from the beginning.
2. Focus on Building a Connection
Get to understand the pains and challenges of your prospects early in the conversation. After gathering enough information on your prospects’ pain points, show genuine interest in helping them solve their problems. This technique enables you to build a quality relationship, and buyers are less likely to resist pricing when talking with a trusted partner. If you have a solid connection, they’ll likely trust you enough to say yes even when the price is higher than they were expecting to pay.
3. Quantify Your Prospects’ Problem
Help your prospects understand the degree of their problem and the financial and emotional costs of not solving them. After using that trick, present the financial and emotional benefits of your product or service. Clearly define how much you’d help them make or save and describe the satisfaction and feeling your product or service will provide them.
If your clients understand the consequences of not solving their problems, they’ll often focus more on solving it than pushing back on price.
4. Present Your Price Correctly
Don’t try to sell your prospects on your price. You already took the time to list the features and benefits. Instead, provide your prospects with the best and briefest explanation of your price. The key is to explain, not sell. Present your price in a way that helps your clients make faster decisions.
Additionally, remember to provide answers to all the questions they ask about your price. If you seem like you can’t justify the price, they likely won’t feel the need to spend their money.
5. Present Your Price at These Two Best Times
It’s usually best to present your price either at the beginning or end of the sales discussion. Both times offer their advantages and disadvantages.
For example, presenting your price at the beginning of the sales discussion helps your prospect determine if your price point falls within their budget. This timing helps them quickly decide to either move forward with you or leave. If they move forward, you’ve solved the pricing problems and can focus on convincing them that your product or service is worth every cent you quoted. If they leave, you’ve saved your sales team hours of unfruitful discussion.
On the other hand, presenting your price after selling your prospects on what they stand to gain — or lose — reduces their objection to your price and, in most cases, completely eliminates the need for price negotiation.
In any case, it’s best to consider each conversation on an individual level. If it feels more appropriate to broach the cost of your product or service at the beginning, you can feel free to make that judgment call. It’s also smart to think about your current relationship with the client and which timing might sit with them better.
6. Say This if They Ask for Your Price Early in the Discussion
Here’s a version of what to say if your prospects ask for your price early in the discussion. “All our products are tailor-made for each client. Therefore, I need you to give me more information about your needs so I can give you a customized price.” This trick will immediately signal that they may pay more if they don’t take their time to explain what their needs are and exactly how your services or products fit in.
7. Avoid This Common Mistake Proud Salespeople Make
Do your best to avoid quickly listing off the features and benefits of your products. This approach can destroy your chances of closing the sale at your specific price point, especially if your prospect already has a supplier that offers similar features and benefits. Instead, take your time to listen carefully and understand the needs of your prospects. Then, present your offering as a solution to their problems while weaving in your price point as a no-brainer.
Ensure you tailor every advantage to the problems and needs of your prospect. A benefit is only a benefit to a prospect if it solves a problem they’re facing.
8. Use This Technique to Avoid Arguing With Prospects
Focus on showing — not just telling — your prospects the return on investment your products or services offer. Rather than justifying why you charge a particular price point and what it means to your company, talk about what buying your product means to your prospects. Taking this step will immediately make your price point seem more feasible for your clients.
9. Let Go of These Kinds of Prospects
Be prepared to walk away from sales conversations that won’t add to your company’s bottom line.
In reality, many prospects won’t end up buying from you. When you find prospects that fall into this category, let them walk without regrets. If it becomes apparent your prospects won’t buy, or the prospect still makes demands your company can’t meet without affecting your bottom line, simply let the prospect go so you can move forward to the next opportunity.
10. Lead With Confidence and Concern
Always start and lead the negotiation process with solid confidence and genuine concern for your prospects. Show your prospects you truly care about their needs and want to be their partner in helping them achieve their goals. Often, salespeople think charisma is their biggest strength — but listening is just as essential.
These strategies will help you handle pricing discussions with your prospects in a way that shows you want to help them make the best decision. In most cases, your prospect will immediately ask, “How do we proceed?” In other cases, they don’t. When this situation happens, how do you handle these questions to ensure you don’t scare them away or lower your price?
How to Handle Price Related Questions
Here’s where most salespeople get it wrong with price-related questions. They see these inquiries as resistance to buy instead of a signal of interest in their product or services. Similarly, when posed with price questions, some salespeople dodge the question, delay their answer or deliver a clever maneuver — all without giving the prospect what they asked for, which is an actual figure.
When prospects ask for your price, and you don’t provide an actual figure, they may think you evaded the question so you can gather more information about their needs and use it to blow up your price. Also, they can feel you’re not confident the product is worth the price or you only care about selling to them. This situation lowers the trust they have in you and triggers their defenses. Likewise, they’ll withhold helpful information from you when you ask questions about their problems.
What happens when you provide your prospects with an actual figure when they ask for your price? They open up to you, as well. Most buyers want sellers to give them complete, relevant and timely responses to their questions. Therefore, withholding price information from your prospects when they ask can negatively affect your sales.
Instead of using clever sales tactics on your prospects, here are four ways you can answer pricing questions and still use it as a building block to close the sale.
- Follow the price with a question: Immediately follow the price with a request for more questions from your prospect that will help you build a case for the benefits of your product. For example, if you offer accounting services, you could say, “Our starting price is $1,000 per month. What other factors do you look for when making a purchase like this?”
- Follow the price with the benefits: Immediately follow the price with full disclosure of the advantages they’d get for the stated price. Still using the example of an accounting firm, you could say, “The starting price is $1,000 per month, and we’d manage your tax planning and preparation, payroll, cashbooks and all your finances. In six months, you’ll save over $6,000 compared to hiring an in-house accounting team, recover seven hours every week and see a massive improvement in your bookkeeping. What would this mean to your business revenue if our service can help you achieve this?”
- Follow the price with a statement of personalization: Immediately follow your price with a statement that personalizes your offering to your customer’s specific needs. For the accounting firm example, you could say, “The starting price is $1,000 per month. From my research on your business and industry, I believe effective and cost-saving tax filing is a major challenge. How accurate am I?”
- Follow the price with a statement of urgency: Immediately follow the price with urgency. Using the same accounting example, you could say, “The starting price is $1,000 per month. We’re giving it out at this price for the next three days, after which the price will go back up to $2,000. How do you think a lower price will help you?”
What do you see in all of these responses? You give your prospects an exact answer to their question at the right time while taking the opportunity to build on the price to help close a good deal. As a result, everybody wins.
How to Adjust Your Price
Unless your company offers a discount or introduces a new pricing plan, it’s usually not advisable to reduce your price in a sales meeting. If you reduce your price for one customer, you may end up doing the same for more customers and end up ultimately bringing down your price. Price reductions like these can significantly affect your company margin.
Additionally, price reductions communicate a lack of confidence in your price, make your prospect feel like the reduced price is too high and sets the stage for future requests to compromise on your price. If it becomes apparent that without a lower price your prospect may not buy and you may lose the sale, you can try the following tricks:
- Lower your price after lowering your deliverables: Using the accounting firm example, if the prospects request a lower price of $500, you could bring the price to $500 for a reduction in working hours.
- Bring other variables into the negotiation: Most times, the price pushbacks lie within the circumstances around the offering, not just the price. For the accounting example, you could offer faster delivery time, more revisions or decide to provide your prospect with a dedicated staff.
- Offer better payment terms: For the same example, offering your prospect the option to pay in installments can greatly reduce their resistance to your price and get them to buy, since they can pay a better price each month.
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