Q. Dear Zenagos,
I sell consulting services to large companies, and I wish I were better at dealing with pushback on price. Do you have any helpful advice?
Of course, a business wants to get the best price for every purchase, but the key for the salesperson is to identify the root cause of the price objection and determine the best way to address it.
Dealing with Procurement
Large companies usually have a procurement department, and the head of procurement is often directed to push back on price, no matter what. In fact, their primary mission is typically to get the best price possible. If you offer a unique service, and the executive to whom you are selling really wants your offering, then you may be able to play hardball. In that case, you can set your price and then wait for the executive to maneuver procurement out of the way.
However, if there are other providers who offer a similar service, then standing firm on price may cause you to lose the deal. The procurement department will pressure the executive to go with a less expensive option. If you want the executive to push back on procurement when there are other comparable providers, then you will need to build a strong relationship with the executive. If the executive likes and trusts you and really wants to work with you and nobody else, then that person may be willing to spend some social capital to influence the company to choose you as the vendor.
When you get pushback on price, it may be that the company truly has a limited budget and cannot afford your full rate. If you have developed a strong relationship with the buying executive, then that person may tell you the size of the available budget. In most situations, however, you won’t know the available budget. If you receive pushback on price, and you believe that the company really can’t afford your rate, then consider three options:
1. Reduce the Offering as You Drop the Price
If you drop the price without changing the offering, then the customer will think that your offering doesn’t have real value. So, never cut your price without first reducing the offering. For example, if you are a party planner, offer to go from open bar to cash bar to cash bar to cut the price. Or, reduce some other part of the offering – maybe you don’t need flowers on every table?
2. Explore Budget Timing
If the customer says they don’t have the budget to buy your offering, ask when they will have the budget. Often, the company can plan the new purchase into the new budget. It’s better to wait a little while than to lose the sale altogether.
3. Ask about Alternatives
When a customer says that the price is too high, it can mean that they have a competing option at a lower price that they consider to be of equal value. See if you can find out what their leading choice is, so you can compare the value. What matters isn’t what you think the value is. What matters is how the customer perceives the value.
When you think about the competing options, make sure you consider that the customer could decide not to make any purchase at all. Often, salespeople make the mistake of assuming that the customer will buy something. However, the customer can always decide not to buy now, or ever.
In the end, the best way to hold your ground on price is to have an offering that is unique and offers a very high value. If you’re finding that you have a hard time dealing with pushback on price, then think about the value. Is there hidden value that you are not communicating effectively? Is there a way to add to the service in a way that would really increase value for the client? The best salespeople are creative. See if you can find a way to make your offering a no-brainer.
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