Monday, June 13, 2011

 

Six strategies for overcoming price objections

Rarely is any seller not asked about price. Smart buyers ask about price out of instinct, out of principal, if only because they've been taught that the first offer isn't real anyway.

This doesn't mean they're not going to buy. It also doesn't mean they're not going to buy at the first-quoted price. How you react when you get that price objection will determine how frequently you're able to preserve value, price and high conversion rates to close.

Here are six price-related objection-handling strategies to keep your deal moving.

1. Make sure it’s not really a timing issue
The price objection you're hearing now may be related to real-time cash or budget availability, not the value of your product or service. If you're selling at the end of a buyer's fiscal cycle, for example, the prospect may have most of their dollars already committed.

If you can get creative with financing options or push the deal forward enough so that it can be funded out of a different quarter, fiscal year or budget, you may eliminate the pricing issue without directly addressing it. Nobody likes to push close dates out, but it might be worth it if you can preserve full price (I bet your CFO will go for that option as well).

2. Stand up for your product’s value
As I stated in the intro, most buyers are going to object to your price by default. They have nothing to lose when they do this - they know you want the sale, and one price objection isn't going to kill anything. Most sellers immediately start negotiating to a lower price at this point, which is a clear sign to your buyer that, not only was your first quote inflated, but your second quote probably has wiggle-room as well.

If you instead stand up for your pricing and product's value, you're sending a message to the buyer that the original price quoted is real. Sellers are often surprised when they find this simple tactic gets their first quote accepted without further negotiation.

3. Make sure they’re not just stalling
Objections to price often have a larger meaning. It can sometimes mean the prospect isn't focused enough (sometimes just at that moment or on that day) to think through an approval decision. By asking the seller for a better price, sellers can delay their decision to another day and, perhaps, get a lower price in the process.

If you feel the buyer might be stalling, appeal to the previously agreed-upon timeline and need for your product or service. Remind the buyer that they (not you) need to make a decision quickly to take advantage 0f the situation, pain or need/objective you started selling against to begin with.

4. Do the math on the ROI for them
Price is one thing, but ROI is another. Price is right now, unfortunately, in most cases. The buyer has to make a commitment and write a check. But if they've effectively done the value translation (or, better yet, you've helped them do the math), they know that a small investment now will pay big dividends down the road in higher revenue, lower costs, or a combination of benefits.

Buyers (and especially procurement departments) too often get focused on up-front costs at the expense of long-term value. Make sure, especially when it comes to negotiating terms, that the buyer fully understands (and can communicate to others in the organization) the value and long-term impact of an investment with you.

5. Find the REAL objection
Sometimes price objections are a pure stall tactic. Other times, they're used in lieu of something else that's keeping the deal from happening. Price, in this case, is the easier way to stall a deal. Easier than admitting the organization may not be quite ready to implement your solution. Easier than having to explain to their boss why it's so expensive (vs. what benefits it will provide). Easier than making personal commitments to implement the solution.

If you're fully invested not only in the sale but in the implementation for the buyer (which should be part of how you're selling anyway), you should have enough inside knowledge to ferret out what other objections may be actually behind the price questions.

6. Walk away
If you've qualified the opportunity, if you know that the prospect needs what you're selling and is convinced that your company can provide the best solution, then walking away isn't going to lose you the deal. It's going to call their bluff. And if it doesn't, if they don't have a sense of urgency to solve a problem or capture an opportunity, then your deal may not have been well-qualified to begin with.

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