When it comes to price objections many salespeople will dread the question, some will jump straight into negotiation while others can become annoyed that the prospect does not see the value in your product or service.
To overcome the price objection is simple, if its thought and planned through.
You first need to discover is the price the only objection with the offering? And if you could agree on the price then there would they buy? By asking these set of questions you tease out of the prospect, is price really their only objection or is there other things that they are not convinced about or need in your offering.
If the prospect starts talking about delivery or features and benefits then price was not their only concern and you need to go back and address what it is that the customer needs. If your selling your product or service at £10 / $13 on a 3 – 5 day delivery and your competitor is at the same price with next day delivery and the delivery is included in their price then your offering cannot be about the speed of your delivery. It could be that your competitor uses a cheaper base material allowing them to produce for less so that they can incorporate free shipping into their offer. By stating that your product will increase efficiency as it lasts longer could be enough to overcome the next day delivery.
If there are features that your competitor has, and your prospect states they need them and you don’t offer them, you will not close the sale. This is a critical piece of information and unfortunately it gets lost in the corporate culture. If you have both prospects and clients talking about a competitor feature and how good they are it must be on the radar of the Research and Development team in your organisation.
Most of us recall the launch of the iPhone with the touch screen and the world fanfare that followed. Quickly all but one of the major phone companies produced their own version of the touch screen, with the one exception being Blackberry who had approximately 50% of the global phone market in 2009 and by 2019 had less than 0.0%. The change in your marketplace might not be as dramatic as the touch screen phone but there needs to be a system and process in place to identify the changes and for the R&D and design team to take action.
Being upfront with the prospect from the start about the price is important. Drop into your pitch that you know you are not the cheapest. But that there is a reason, you use better materials, sustainable, customer support service, delivery, new features or benefits.
Whatever the Unique Selling Point (USP) it must be enough to justify the price difference.
Price when broken down can show some unbelievable things that many don’t stop to consider. Two companies selling conveyor belt wheels for a food processing company. One company sells at £25 a unit and uses the best steel the other sells at £20 and uses a lower grade steel. By reviewing how often the machine goes down for maintenance due to the lower grade wheel, the loss in production, fitter/mechanics time, production operator having to be reassigned and so forth. The additional cost to purchase the more expensive one with the guarantee that it will last longer is a small price to pay for so many increased benefits.
Alternatively, if price is an objection ask the prospect to state how long they will have the product for, 5 years, how much does that break down per year or week. By breaking the number down smaller the prospect is thinking to themselves do I want the cheaper version or this new widget that’s going to cost 20p / 50c per week additional.
Lastly when it comes to price objections, you need to ask the question does the prospect have a budget? If they have an allocated budget which has maybe been signed off at corporate or Government level, they will often not have the authority to purchase a more expensive prospect or reallocate money from one budget to the other in order to buy from you. If you are at the stage in the buying cycle when the money has been assigned to the person, chances are if they were not speaking with you in the last six months they will have asked a number of your competitors to give them a quote. They have then used the quotes in their submission to be granted the funds in the first place. I have seen budgets reallocated, but it is a drawn out process in large organisations with detailed justification to be given to senior management. Unless your prospect is picking up the phone to call the person who allocates the funds there and then, chances are if your new to the prospect, they won't stick their neck out to get more funds to buy your widget. The best thing you can do in this situation is accept that this round of purchasing is not for you, keep in contact with the prospect and duly note when the next purchase budget will be allocated.