Handling the Dreaded Price Objection
What’s the number one sales objection in today’s economy? The price objection, of course. We get it so often that you’d think we’d have developed an answer for it by now. Unfortunately, most salespeople don’t take the time to prepare a proper response to this challenge.
Where does the price objection come from and how can you counter it? Apart from the fact that your product or service may actually be too high in comparison to what else is available, or that the prospect simply can’t afford it, there is only one other prime reason that the price objection comes up, the prospect DOESN’T WANT to afford it! Any price will be too high if your prospect doesn’t feel they want or need your product/service.
Let’s face it, price is always going to be a factor in every sale, but it is rarely the deciding factor. In fact, in a recent survey, only 14% of the respondents put price first. Confidence in the salesperson or product, quality, selection, and service all came before price. Of course, we’re standing around wondering where these 14% are because we only seem to talk to the other 86% of the population, the ones that want to grind us down on price!
So, we can’t eliminate the price objection, but we can minimize the danger of it ever coming up if we practice value-added selling techniques. This means showing the prospect beyond a shadow of a doubt that they are getting good value for their investment. Even then, price-sensitive prospects may challenge your price, so it pays to be prepared to meet the challenge.
Everyone (you and I included) is trying to hold on to their hard-earned money for as long as possible. Having said that, people are still buying, and your job is to get them to buy from you.
Price Handling Strategies
Here are ten strategies that, if practiced, will give you the confidence you need to tackle the price objection head on. Don’t try to become good at all ten strategies. Find 2-3 three that will work for your particular selling situations and then master them. You’ll be surprised at the difference being prepared will do for you.
1. Focus on the price difference, not the price.
Your price is too high in comparison to what? Usually someone else’s price. Find out what the other price is and then focus on the price difference, not the total price. Sure, you may be 10% more expensive than your competitor but if that 10% buys your prospect 30% greater benefit you are showing value-added. The key is to avoid using the larger number in your discussions. Phrases like, “For an investment of only $50 more, you’ll be getting…” or “Let’s see what the extra $75 gives you”, gets the prospect focused on the relatively small dollar difference, not the larger dollar value of the sale.
2. Make the price seem smaller.
If the product is something your prospect will use for a long time, amortize the cost over the life of the product. Break the price into cost per day, week, month, or some other suitable time frame. Again, focus on the price difference rather than the total price. This way the comparison will seem even smaller. “For only $2 a week you’ll have all the additional benefits we talked about.”
3. Make it an investment, not an expense.
Show, don’t just tell, your prospect how much he or she is saving and benefiting. Contrast this with the small additional amount your product or service may actually cost. By focusing on the benefits, you’re helping the prospect see the added value of dealing with you.
4. Compare results, not price.
Often called the “spotlight” method of handling objections. Focus on the parts of your offering the prospect really liked and remind her that what really matters are the results your product or service delivers, not just what she pays for it.
5. Explain the potential drawbacks.
Discuss the drawbacks of purchasing cheaper goods or services. Point to limitations in use, expandability, lower resale value, lower quality, fewer features, etc. You really have to know your competition to use this technique well. It’s appropriate to contrast yourself to your competition but you never, never, never, knock your competition.
6. You get what you pay for.
Ask your prospect to recall a time when he made a purchase based on a low price that he later regretted.
7. Compare with more expensive products.
Show how your product has features found only in much more expensive products. This will make your price seem lower, as well as build perceived value.
8. Use easy payment terms.
Make the terms of payment as easy as possible. Use low down payment, instalment, leasing, extended term, etc.
9. Extra benefits.
Smart salespeople always keep a few benefits up their sleeve for just this occasion. Point out previously unmentioned benefits that your product offers to the prospect.
10. Hidden benefits.
Call your prospect’s attention to the hidden benefits of dealing with you and your company. Explain to the prospect that the price you quoted is a reflection of the total value received, including other benefits like dependable service.
Under-promise and Over-deliver
I know I only promised you 10 techniques but here are two more for you.
11. Know why your product is worth its price.
If you don’t know why the prospect should pay your price, don’t expect him too either.
12. Challenge your prospect.
Ask your prospect to make sure she is comparing exact specifications. Mention features (and benefits) that may be different. Ask her to compare quality and workmanship. Many products look alike and may seem “just as good” but in reality are quite different and sometimes inferior.
So, what’s the bottom line? Simple. Practice these techniques in advance and be prepared for the dreaded price objection so that when (not if) it comes up you can handle it like a pro.