Handling Price Objections
Building value is important. I would be kidding myself and everybody else, however, if I said when you build value first, you will seldom get a price objection. Genuine price issues are rarely around cost, but around value. Salespeople who do not know how to build value become price oriented because a low price is all they have to offer. It explains why price is everything to some salespeople.
Still, price discussions are almost always a part of the buying process. A smart buyer will ask about price because a) they need to know how much to budget, b) they want the lowest cost, and it never hurts to ask, c) it is a natural inclination, d) they have learned that the first quoted price can often be talked down.
Here are some other noteworthy facts to digest before you let a price objection overcome you: First, it is usually the salesperson who initially brings up price. Second, rarely is anything bought based on price alone. Third, it is not true that offering a lower price is your best chance to keep your customer from buying elsewhere. Finally, price is often the most convenient excuse for the real objection.
Regrettably, many salespeople take price objections at face value and discount their price at once. These salespeople get tense. They argue, or worse, they consent. The customer says the price is too high and the salesperson agrees. As a defense measure, these salespeople automatically drop to their lowest margin.
Develop the Right Attitude
It is likely that in the past you have felt the need to negotiate price in some of your own sales dealings. By acknowledging this, we should not feel offended when we are on the other side of the selling fence. When you and your customer get to the price discussion, it is important to understand your buyer’s perspective. Think back to when you were making a major purchase. You probably figured out how much you were willing to spend months ago. But once you were ready to finalize the deal, doubt and emotions came rushing in: “Am I paying too much?” “Can I really afford this?” “Is this flooring really worth this much money?” “Maybe I can just keep dogging out my old flooring a bit longer?”
It is important to understand what your prospect is feeling. Your ability to empathize with your customer displays sincerity, keeps you focused on the customer’s needs, and naturally generates trust and openness. The customer will sense that you care about helping her solve needs, even price needs, not just selling her a product. Even though you want to make more profit and more sales, you will accomplish these goals more rapidly when you understand what it is like to be in her shoes. When you can truly develop empathy for the person you are helping, it is nearly impossible to be impolite, discourteous or display a poor attitude. Empathy is an attitude.
Understand Price Objections
Before we move on to true price objections, occasionally a prospect will tell you upfront that price is the most important thing involved to obtain their business. “I am shopping for the very best price.” (Best price for what?) This prospect may even state, “I’m looking for the cheapest thing you’ve got.” Please understand this: Rarely does a customer come into your store for the lowest price; she wants a beautiful home at a fair price.
Realize that price objections at the beginning of the sales conversation are tactical ploys coded to say: “Treat me right.” Acknowledge this price ploy with a simple, “Custom Flooring is by no means a high-priced store. And, naturally, I understand how important price is and I will work with you on cost. So that I can help you with price, let me gather some information.” In other words, address her concern and move on to her real concerns of color, style, quality, and a home she can be proud of.
Embrace the Power of Silence
Normally, price concerns come up later in the conversation; often last. The first response to a true price concern is to counter the objection with brief silence. Count to three, slowly. If you have established rapport and offered excellent value, with just a little silence, it is amazing how often the prospect will feel guilty for bringing price up. Give the customer a moment of time to respond to your silence. Once you do, customers will often begin explaining their rationale or answering their own objections. They may even offer some much-needed information. Silence can be your best weapon, and while chilling, it is rarely seen as rude or offensive.
Cushion the Price Objection
Begin by thanking your customer for their candidness. “Thanks for sharing that. I absolutely understand this is a big investment…” Or, “Thanks for letting me know that…” Or even, “I am glad you mentioned that. Naturally, everybody wants the best deal…” These statements communicate to the prospect that you understand her, respect her, and genuinely want to help.
Determine the Whole Objection
The next thing we must do after a price objection is clarify the complete reason your customer is asking about price. Ask questions. Is it just the price, or are there other things? So, after a brief pause, look the customer in the eye, and say, “I appreciate your honesty. Is there anything else besides price that is concerning you?” If there are other factors, we need to get the prospect to talk more about those other objections and then address them first or they may re-surface and come back to haunt us. Customers often use price as a disguise to mask other concerns they are hesitant to discuss.
Get in the Ballpark
If there are no other issues, we zero in on the price issue. Find out what “too high” means, “I appreciate your honesty. How much were you thinking of spending?” Or, “Thanks for letting me know that. How much ‘too high’ do you feel this is?” The prospect’s response may disclose whether we are in the same ballpark or playing in a completely different stadium. Before you can overcome a concern about the cost of your product you must first know how expensive too expensive is.
Clarify the Objections
A price ‘too high’ or ‘too expensive’ are relative terms. Now that you know how high you are, question the reasoning for the objection. How is the customer coming to this conclusion? If you can discover what your prospect is comparing our product or service to, we can then more reasonably compare price and value. Ask, “Thanks for letting me know. Could you tell me what you are comparing us to when you say our price is high?” … Thanks for your honesty, but I am just curious as to what brought you to that conclusion?” Or, “I appreciate you telling me that. Have you found a less expensive product?” … “Thanks for being honest. How are we comparing apples with apples?”
When you ask, “What is the reason you feel we are too high?” and be quiet, sometimes you will get a rather elaborate and useful response. These why, what and how questions prompt the customer to break down their reasoning. Further, gently asking these questions encourages the customer to explain their perception of your product along with any limitations they perceive. These questions also turn the conversation back on the customer, so they are forced to explain their reasoning or perhaps admit they were bluffing.
Another important consideration is to make sure your product is affordable to the customer. We hopefully discover this concern in earlier phases of the selling discussion. Still, if she can’t afford it, she can’t easily buy it. Ask softly, “Is this out of your budget?”
Establish Desire and Gain Commitment
As salespeople, we never want to discuss price unless we feel that the customer has a genuine desire for the product under consideration. After all, it is a bit pointless to discuss price for something your customer does not want or need. Ask your customer, “Setting price aside, do you feel that we have the correct color, style, quality and service you want for your home?” … Or, “Let me first ask you this question. Do you feel this flooring will work well in your home?” In other words, does the product at hand have the right value and purpose to your customer. Gaining a commitment of worth is an important prerequisite to defending price or standing firm.
Defend the Price
A prerequisite to defending your price is knowing the issues and concerns that your customer is facing and meeting them. It’s called added value. This added value could also take the form of innovative ideas, technical support, or other proactive problem-solving capability. Turn the objection around by reframing the conversation back to the particular needs of your customer. “You mentioned wanting stain resistance and durability… is that still an important concern for you?” Remember, only when price skips past the equilibrium of needs vs cost will the customer not justify his or her decision to buy. To the extent that you have not created needed value, price becomes increasingly more important.
Savvy buyers will often bring up price just to see if they can squirm some concessions out of the salesperson or try to make sure they are truly getting the best deal. Stand firm and state, “I do understand that price is a very important consideration. Even so, it is not our goal to always have the absolute least expensive price. We have been in business for a long time and we are successful because we deliver service, quality and use certified installers. I have yet to see a store that can offer the very lowest price and the best value and service. Is price the main consideration that you are looking for?” Or, “We feel that our prices are extremely competitive. We know and expect that you may be seeking other quotes. And, based on our experience we feel confident that our prices are in line with our competitors. Did you find something less expensive somewhere else?” Here is one more, “Ms. Prospect, I always offer my absolute best price to my customers the first time around. Did you see something less expensive somewhere else that you liked better?”
By standing firm on your pricing and the product’s value, you are sending a message to the buyer that the original price quoted is real. Sellers are often surprised when they find how this simple tactic gets their first quote accepted without further discussion or negotiation. Further, if negotiations do become necessary, it sends the signal that price deliberations will not be sweeping.
Good selling to you.