If your prospects push back on your price, you’re not giving them the right value.
Let’s talk about what happens in the worst case, when sales reps just toss out some numbers without even really understanding the customer’s problem. Of course the prospect will push back on price. It’s the only thing they have.
Hopefully, you’ve done your homework and followed the advice of Marc Wayshak’s article 3 Ways to Build Value, you know your prospect’s challenges, understand their goals, and have clear objectives for the project.
However, if you don’t understand the financial impact of the problems (and solution), your price may appear too high. Heck, it may be too high. Perhaps the biggest issue is that while people love to talk about their problems, they often don’t know and don’t even have a good way to figure out the financial scope of the problem. This led to the infamous ROI spreadsheets that showed that buyers would get a bazillion percent ROI in the first 6 minutes of the project. I kid, but just a little. If you want your ROI to be believable, it has to be the customer’s ROI, which you can help on, but can’t dictate.
Note that value is something the buyer perceives. If they don’t perceive it, it doesn’t exist. Your price is limited by the perceived differential value you offer, compared to the next alternative.
Assuming you have a good business case, buyers are still trained to push back on price. Why wouldn’t they? Many sales reps start preemptively discounting just because they haven’t gotten a response to a proposal. Purchasing groups get bonuses based on how much they can get you to lower your price.
So what should do? First, figure out if the value is wrong. If the value isn’t there, you can’t justify the price and you need to think about whether you can remove elements from your solution that aren’t providing value but do add cost. Or you need to walk away.
If the value is there, but the customer doesn’t want to pay for it, first figure out if the price objection is just a convenient mask. (“If we could meet your price, are you ready to move forward today?”) If price isn’t the real issue, don’t lower your price. It seems obvious but it happens all too often. If price is the issue, offer to simplify the solution (remove some value) in exchange for a lower price. Sometimes price itself isn’t the obstacle, but the payment terms are. You can be creative with terms or other mechanisms to lower your cost in exchange for a better price.
Just don’t start cutting price without understanding the value the customer perceives.