“You Are Too Expensive” – Eight Ways To Handle Price Objections
“You are too expensive”, “we don’t have the budget”, “we really can’t afford it”, “your competitor is much cheaper”,… we have all heard them before. Unless you are by far the cheapest supplier on the market – and even then – you will get price objections. Of course they are not always true objections and there may be different reasons why the customer raises objections, but the fact remains that every salesperson should know how to handle them.
Here are some techniques to justify your price and make it easier to digest for your customers.
Focus on the price difference
Ask the customer what he’s comparing your price too. If a competitor offers a lower price, then focus on the price difference and show the customer what he’s getting for the extra investment. The idea is that the price difference is always a lower sum of money than the actual price, so you’re discussing smaller numbers.
Compare your offer to higher-priced offers
Let the customer experience that your solution has certain benefits that he would normally only find in higher-priced products or services. This will increase the perceived value of your offering.
Stress the drawbacks of a lower-priced offer
I’m talking about the materials, production techniques, design,… They all influence the quality and life span of the product. Also ask your customer about his experience with low-priced products.
Make your price seem lower
The best way to do this is to divide the total price by the life span of your product in months or years.
“You will be using this computer for five years. This means you will invest only 200 dollars a year. That’s 16 dollars a month, and then I’m not even talking about tax deductions.”
Offer a payment plan
If the customer can’t afford or is put off by making a big one-time investment, then see if you can let them pay in installments.
Present a cheaper alternative
“I understand Ms. Farrington, of course we can always leave out the instant phone support.”
Never grant a price concession without asking for something in return.
Explain what you don’t charge for
The customer might change his opinion about your price as soon as he realizes what he’s not paying for e.g. time spent on planning or implementation.
Talk about the valuable intangibles
Some examples of intangibles are 24/7 technical support, free back-up or replacement, highly educated staff etc. Always remember that your price represents the full value of your offering, including the service and support the customer gets.
Wim
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16 Responses to ““You Are Too Expensive” – Eight Ways To Handle Price Objections”
Bill Dorman on May 14, 2011
In my world of commercial insurance sales, we try to move the conversation away from the insurance policy; anybody can place a policy. We talk about total cost (not just the policy) and what are you doing to pro-actively reduce expenses/exsposure to improve your bottom line.
We also expect to be able to quantify our results as well. This methodology has allowed us to keep price as not the total deciding factor, but bring it back to cost and how can we reduce that.
It’s all about creating value and finding the buyers ‘why’. It’s never about you or your sense of urgency, but the buyers and why does he want your product or to do business with you.
Good article Wim; sales is one of those professions that look easy on the outside but as we all know there are so many moving parts and personalities we just want to cut thru the clutter.
Sorry it took me so long to stop by and I’ll definitely subscribe as this will be a good site for me as this is what I do in my payin’ gig. Good to see you and I do appreciate your support.
Wim on May 16, 2011
Great to see you here Bill!
I didn’t even know you were in insurance, so that’s a bit of a surprise to me
I like your strategy of focusing on total cost instead of just the policy. Makes it much easier for the customer to see the value in your offer.
In the end it’s only when the customer values your product or service more than he values his money that you’re going to make the sale.
Sales sure is a complex matter and in my opinion still undervalued as a career option. It’s very challenging and if you learn how to do it right, can bring a lot of success and satisfaction.
See you soon,
Wim
Daniel M. Wood on May 15, 2011
All prices are expensive if the customer doesn’t understand the value of your offer.
If I offered you nothing for 5 dollars it would be too expensive, but if I offered you a nice car for 100 000 dollars you might consider it a consider it a good deal.
Price is just a question when you put it next to the value of the offer.
If the percieved value of your offer is less than you are charging you are too expensive.
The solution is to (just like you wrote) prove that you are worth more than you charge.
Price objections are also often only an attempt by the customer to get a better offer, often they really want to buy your product, but they hope to get a little discount.
Wim on May 16, 2011
“If the percieved value of your offer is less than what you are charging you are too expensive.”
Dead on! I like that a lot Daniel.
I like to see it as a balance with the customer’s money on one side and the value you provide on the other. Every persuasive argument puts more weight on your side of the balance. Only when it’s totally balanced or your side is lower than the customer’s, it’s time to close.
Thanks for sharing,
Wim
Daniel M. Wood on May 16, 2011
That is exactly what I was trying to get across Wim.
Tom on May 16, 2011
Great article Wim, thanks for sharing!
The most commonly used “excuse” I hear for losing a sale is price.
Sales reps complaining about their product being “too expensive” usually don’t understand how to explain the value.
I think I may just make the next person who complains about price copy your article ten times
Best
Tom
Wim on May 18, 2011
Haha thanks Tom,
Especially professional buyers who deal with salespeople all the time know how to use the price objection to their advantage, putting you under pressure.
Price is just one of many aspects of your offering, it’s the salesperson himself who decides how important an aspect it becomes.
See you around,
Wim
Brad Harmon on May 17, 2011
I think some customers seem to think it’s their job to complain that the price is too high, Wim. Sometimes, they object to the price before they even know what it is!
Thanks for sharing these tips with us.
Wim on May 18, 2011
It’s indeed a very popular excuse Brad. Even when the real objection is something entirely different, customers will use price to get out of the negotiation. That’s why it’s important to know how to recognize a false objection.
You can do this by isolating the objection e.g. “If price were not an issue, would you buy right now?”. If the customer says no, you know there are other issues to address.
Thanks for stopping by,
Wim
Ashvini on May 17, 2011
Hi Wim,
In my opinion, its the competition that fills up the mind of customer with a lot of false stories, leading to trouble for a genuine vendor.
I was not directly into sales but CRM implementation. It was difficult to convince customer to change their processes to standard processes. With slow and persistent argument, many times I was able to show them the right way.
Sales is a long drawn process where making the right impression and building trust is important and you show the right ways.
Thanks
Ashvini
Wim on May 18, 2011
Hi Ashvini,
You’re right that sales can be a long and slow process. The more skilled and experienced you become, the better you will be able to shorten the sales cycle and get results faster.
I have some experience with the CRM market and it can, indeed, be a complex matter. Every company has a different approach to it and it can be difficult to switch from one to the other.
Thanks for your input man,
Wim
Jana Quinn on May 18, 2011
LOVE this article. The internet did one thing for comparison shopping, and smartphone apps like ShopSavvy have made it a full-contact sport.
Salespeople, more than EVER, need to be able to take the focus away from the “price” and replace it with an explanation of “value.”
Wim on May 19, 2011
Thanks Jana, great to see you here
It’s true that the internet has made it easier than ever for the buyer to compare products and prices and look for reviews and recommendations. That’s also why I believe it’s crucial for sales professionals to embrace the internet instead of seeing it as the enemy. Be where your customers are, right?
The role of salespeople has changed a lot since the emergence of the internet. Before they had the job to inform customers about product features and prices, but this has largely become redundant as people already know that. The information is up for everybody to see.
Instead today’s salespeople should take on the role of a consultant, finding ways to cut costs, optimize the production process or increase revenue. It’s about discovering needs and presenting tailored solutions.
Thanks for your input!
See you soon,
Wim
Jana Quinn on May 19, 2011
I wish this could be posted in every office and cubicle in the world: “Instead today’s salespeople should take on the role of a consultant, finding ways to cut costs, optimize the production process or increase revenue. It’s about discovering needs and presenting tailored solutions.”
If you don’t want to be replaced by a submission form, you need to offer more than a submission form.
Although I know the internet is viewed as the “enemy” by some, I definitely think it’s given forward-thinking salespeople an even greater advantage in establishing a relationship. Before, the sales-customer relationship was informational; now, it’s more dynamic. Customers see consultants more as problem-solvers rather than order takers, which can strengthen brand loyalty.
Thanks for the reply; your blog has definitely been bookmarked for future tips.
Best,
Jana
Wim on May 20, 2011
Hi Jana, always nice to meet someone who ‘gets’ it. From what you write I can see you really know what you’re talking about.
It’s true that the internet offers tons of new opportunities. You can literally increase your visibility with a mouse click. Salespeople can now do research or even interact online before contacting a prospect by phone. LinkedIn could be the only prospect database you’ll ever need.
In my experience especially the older generation has problems with this new way of approaching customers, but I don’t think they have a choice. Sales 2.0 – as people call it – is more than a buzzword. I’m glad Jeffrey Gitomer got the word out through his book ‘Social Boom!’, it’s been an eye opener for many sales professionals. If you haven’t read it, I can highly recommend it.
Talk soon,
Wim
Jana Quinn on May 20, 2011
Wim,
Thanks for the recommendation; I’ll definitely jot it down for the next time I’m sucked into an Amazon shopping spree.
“Sales 2.0″ is often confused with the buy follower/spam email blasts/contact huge audiences at any cost approach. Spending time crafting actual relationships (a.k.a. the old fashioned way, pre-Internet) with a targeted audience will win over “quick” bursts of uninterested consumers and can do serious brand damage.
I like your point about researching before contacting a prospect. Cold calling isn’t so cold when you can anticipate the needs of a potential client; that was something that wasn’t even REMOTELY possible before the Internet.
I think we both agree: cream rises to the top, no matter how big the cup is.
Best,
Jana