Four Common Cost Objections (And How To Respond)
“It’s about listening first, then selling.”
Everybody wants a good deal. Prospects want to know they’re getting the best price before they sign a contract. But how should you negotiate price? Do you stay firm on your pricing, or do you concede? According to Mike Schultz, president of RAIN Group, when salespeople end up giving in, they set a precedent for price concessions and other flexibilities. For example, buyers may want to add cancellation terms or extend their payment terms, which can lead sales reps to continuously chasing quotas.
Schultz says the best negotiators always get something for whatever they give. In this issue of Promotional Consultant Today, we highlight Schultz’s thoughts on how to respond to some of the most common price objections.
“Wow, that’s a lot. Can we do it for less?”
Buyers who ask this question often ask it because they’ve been successful in the past. They think, “Why not ask?” Be prepared that whatever price you give them, they will push back. Schultz says you should be firm in this situation. Explain that you have presented your best price and highlight the value of your product or service. Say something like, “The cost of this solution includes best-in-class customer service and highly trained support 24/7.”
“It costs too much. Money is going to be a problem.”
Whether prospects can’t justify spending the money or they don’t see the value in paying more for a product or service, it helps to share a case study. This could give the prospect the encouragement they need, Schultz says. He recommends saying something like, “I understand budgets are tight. I could rehash the ROI of our product, or I could connect you with a company that had similar budget restraints and saw huge gains in revenue upon implementing our solution. Would that work?”
“I received other proposals, and your price is the highest.”
If you’re familiar with what your competitors charge, you’ll know right away whether this is true. Either way, potential buyers are likely to say this to sway you to lower your prices. Schultz says this is an opportunity to explain why you priced your product or service at a certain amount. Consider offering them an extra month of onboarding support (or some other perk) at a discount, which can boost overall perceived value without causing you to drop prices on your initial offer.
“It’s too much money. Call me back if you can go lower.”
Even if the prospect isn’t bluffing, Schultz says it’s important to remain firm with your offer. If you need to walk away, then be ready to do so. You could say something like, “I completely understand. Would it be okay to call in six months to see if your budget is more accommodating to the solution?” This keeps the door open and keeps you from appearing pushy or desperate, Schultz says.
Price objections happen often in sales. You can prepare for your next negotiation by considering the points above. And remember Schultz’s expert tip: Be ready to trade — not cave.
Compiled by Audrey Sellers
Source: Mike Schultz is the president of RAIN Group, a sales training, consulting and coaching firm.