I want to take a second to talk pricing, price objections, dealing with pushback, and dealing with negotiation on price.
Listen, you don’t owe your buyer a price. I know a lot of times buyers come and ‘say look we’ve only budgeted fifty thousand dollars for this but your product costs 60 to 65 thousand.’ They want you to give them a 10 to 15 thousand dollar break. When they say this here’s your answer to them – No. No, I’m not going give you fifteen thousand dollars because you budgeted only fifty thousand dollars.
That makes no sense to me. What matters the most in sales objection handling is whether or not the value is there. The value is determined by the size of the Gap or to put it another way the value is determined by the outcome they’re trying to achieve in comparison to where they are today.
For instance, if you sell something that saves a bunch of time and currently, today, they’re losing a quarter of a million dollars a year because of this lost time, they’re also losing to their competitors to the tune of fifty thousand dollars a deal, and let’s say their revenue’s down or the revenue is flat, and they’re behind on their goals by a million bucks. Right there is about two million dollars in problems. Two million dollars in problem that they’re having not including their clients are unsatisfied because it takes too long to do stuff.
It’s two million dollars a problem and your product costs 65 thousand dollars – that’s a good investment. Sixty-five thousand dollars for a 2 million dollar gain? That’s a damn good investment. You don’t owe it to your buyer to come down fifteen thousand dollars because they didn’t budget enough. Don’t make their budgeting problem your pricing problem that makes no sense.
Too many of you are selling with the idea that you’re selling a product and so when the buyer says ‘oh hey you want 65 I’ll give you 50’, you say ‘well what if we meet in the middle’ and you do this little negotiation dance. No. No. No. They’re not buying your product – they’re buying the outcome. Overcoming the price objection is all about you being able to frame the conversation to show you value to providing the outcome not about the sticker price.
You have to ask yourself this question.
Why should I discount it? Why do they need a discount? If the answer is because they don’t have enough money, that’s silly, that’s not a good reason to discount. They didn’t save enough money, they didn’t budget enough money, they don’t have enough money, so now you have got to come down on your price? Absolutely not. That makes no sense. Stop it.
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Look here’s a way of looking at price objection in simple terms. You have a beautiful house on the beach. A buyer, who has budgeted 3 million dollars for a house, comes to see it. You have the house listed for the market value of the house, 3.7 million dollars. They want you to come down because they didn’t budget for 3.7 million for this house. No. Go buy the 3 million dollar house 2 blocks off the beach or come up with the extra 700k. Stop giving away money for no reason.
If you want to understand when it’s acceptable to give a buyer a discount ask yourself these questions: why do they deserve a discount? Why should I give them a discount?
If the answer is there’s not enough value, the Gap isn’t big enough, or we have a competitor who can deliver on the same outcome or almost the same outcome for a little less – okay now you’re in a little bit of trouble.
If they can get the same outcome for less, then you need to come down but outside of any competitive pressures like you don’t come off your price. Don’t make their bad budgeting, their lack of affordability, their lack of funds, their inability to save for a rainy day your problem.
Stop giving money away that you don’t need to.
Stand tall and say ‘listen, I’m sorry but you’re trying to try to get two million dollars back – our product only cost 60K, we think that’s outstanding value. We can’t lower our price.”
Stop giving the farm away. Stand your ground. Understand that you’re not selling the product you are selling on the outcome. They’re not buying the product; they’re buying the outcome. Stop doing negotiation and price adjusting over product. Focus on the outcome, focus on the gap, focus on where are they today and where they want to go tomorrow. How big is the Gap? Is what you’re charging worth it? If it is stand by it.
If you or your organization need help improving your ability defining the Gap or dealing with price objections click here to schedule a call with our sales team.