Are you Dropping Price to get the Deal?

Are you Dropping Price to get the Deal?

Written by The CEO Sales Solution

Posted by Derek Weber

Most Price-Related Decisions tell you a lot about your Ability to Convey Value.

In a negative or uncertain economic environment, we are faced with more skeptical buyers, contracting budgets and a resistance to change vendors. Many times sales people deal with these buyer objections by offering to sweeten the deal. However, this approach substantially impacts the business owner whose overhead usually remains constant. If you sell a product with a 20% profit margin that your sales team routinely discounts by 5% in order to get the deal, then in effect you need to drive your team to sell 25% more of that product in order for you to break even!

  • Do you often end up paying for the non-performance of your client’s existing vendor by dropping your price to get the client whose problem wasn’t being handled by the incumbent effectively to begin with?
  • Do you buckle every time your competitor price-drops simply because you lack the conviction or knowledge to differentiate and sell on value?

The buyer’s motivation when objecting to price tells you a lot about your strategy for dealing with pricing and these objections.

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Perception:
The price of your product or service, whether accepted or rejected is contingent upon your prospect’s perception of what that product or service will ultimately do for them when compared to the competition. What the buyer understands your offering is going to provide them is their reality. Before showing or telling them anything it is essential that you first uncover what they are looking for and more importantly what your solution will actually do for them (or avoid with regard to back-end issues) above and beyond their current mode of handling the problem (incumbent). Unless you uncover what is lacking in their current product or service and the ramifications of this absence, you will not be able to sell on value and hold your price.

The typical sales person attempts to resolve the price objection by reasoning with the prospect intellectually. However, by repeating features and benefits that were insufficient to capture the prospect’s signature to begin with you are fighting a losing battle and digging a deeper hole. Resorting to product or service features, years in business, your background or offering impressive customer references have you intellectually engaging the buyer resulting in them wanting to “think it over” or “review your proposal”. Neither of these responses bring you any closer to changing their perception.

To discover a proven external support system to overcome the price objection visit:http://www.saleszonetraining.com/webinar_prospecting.html

By emotionally engaging the prospect you allow them to visualize the outcome or result of your product or services. Emotion obscures reason and blunts intellectual decision-making. An emotional plea to your prospect may be your most effective strategy: “I understand your concerns over cost, in particular during these current economic conditions. However, I also know that your major concern is to:

  • Reduce the back end expenses associated with poor quality, poor pre-project communication or back-end response time to problem resolution, or
  • Provide the safest environment possible for your employees, something you are not currently achieving, or
  • Reduce energy expenses that are a back end cost when dealing with other lower priced products/services

When you take into consideration the up front expense coupled with the back end expenses you have had to incur overall their cost is substantially higher than our pricing structure.

If the price objection you’re dealing with is ego driven, money is secondary and the ability to feel as if they won is paramount. Give in to to their ego, not to a price concession. In some situations the buyer simply needs to win. Keep in mind in any negotiation there is money and there are terms. Uncover what is important to theM such as delivery, meeting critical deadlines or response time to problem resolution. If you can give in on one of their demands this often allows both parties to get what they want. They win with regards to a term you held fast on and you win by holding your price!

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