Understand that price objections are not always what they seem to be. Sometimes the buyer is serious; other times it’s just a negotiating tactic.
A booming economy has not killed off the bargain hunters out there. Sales people are still hearing price objections from these types of buyers.
Understand that price objections are not always what they seem. Sometimes the buyer is serious; other times it’s just a negotiating tactic.
I have a client who automatically responds to every quote with, “I don’t like the price.” It’s a planned flinch he uses consistently because it works.
Inexperienced salespeople feel a need to respond, and they do. It yields his company lower prices from half of his vendors. (As one of his grumpier vendors, I just humorously reply, “I didn’t ask you to like the price. I just asked you to pay it.” He does.)
Economists estimate that 30 percent of consumers are classic “pure price buyers,” who make decisions based solely on the price offered.
My greatest wish for you is that fewer of these price-focused people knock on your door. Let them charm your competitors.
So what do you do when you get a price objection? Will adjusting the price make the rest of the sale flow easily? Not a chance.
A lower price seldom makes up for buyer doubts, discomfort or indecisiveness. A price objection is often an effective way for the buyer to stall the sales process.
You can prepare yourself for when they say, “Your price is too high.” Here are a some tips you can arm yourself with.
1. Price objections signal your buyer’s interest.
Simply raising the objection indicates interest in you and in your proposal.
If the competitor had won, he would already have the order. Sometimes your best move is to stand your ground.
2. If a decision is being made on price, you’re not doing a good job in differentiating your value. What’s value? It’s often the intangibles: trust, confidence, experience, qualifications and credentials. This shows up time after time in customer surveys. Consumers tell us they’re willing to spend a little extra to work with a company that they have confidence in and/or that makes them feel comfortable.
Remember, the kind of first impression you make gives the buyer a taste of what a long-term relationship with you will be like. So, show up on time, respond quickly to phone messages and don’t forget to send a follow-up note or email afterward. Listen carefully to the buyer’s requirements. Be that reliable pro they want to hire.
Sometimes value is also transactional: the ease of doing business, fewer hassles, flexibility in timing and so forth. Often the winner is the one who removes roadblocks and matches a customer’s need for reduced friction in the contractor/client relationship. Dig deep to understand your customer’s priorities and preferences.
3. Giving the client a lower price ultimately makes everyone unhappy. Yes, really. For you, the amount comes right off your bottom line.
An extra 15 percent discount on a 30 percent margin sale cuts your profit in half. You’re clearly unhappy. The client is unhappy too, because he saw you were willing to jump at a 15 percent discount. Maybe he should have asked for a 20 percent discount? Or worse, the buyer now feels he might get reduced service or an inferior product.
4. Avoid a “low price provider” reputation. “The most important thing you can say about your product or service is its price.” I heard this at a conference many years ago. It is just as true today. Your product’s price signals its quality, efficacy and overall value. What is your price saying?
5. Be equally worried that your price is too low.
In this time of rising inflation for both materials and labor, I should be getting more calls from owners who are concerned their contractors’ prices are too low. Take the time to really test where you are versus the market. Quite often leaders price too low because they’re afraid to be too high!
Jeff Carowitz advises landscape industry firms on marketing and business strategy. He can be reached at firstname.lastname@example.org.