Don't Give Into Pricing Discussions
Take a random look at any company’s CRM and run a report on “reason lost” for all of their opportunities for a given period of time. You’d be astonished at the huge number of deals that would be marked as lost with reason lost being “pricing”. Whenever it’s up to me, I advise companies to remove “pricing” as a reason lost from their CRM systems. That’s because I strongly believe that pricing is a nonsense objection and that it is nothing more than an excuse and a cover up. I also believe that the sooner we all admit this to ourselves, the stronger we will be in our sales talks. Here’s why:
It’s a cover up
Anytime a client says that your price is too high you have to be mature enough to confess to yourself that you haven’t done a good job in either establishing trust or in convincing your client that the value of your offering surpasses largely their investment.
But, we all make mistakes, so whenever this happens we just need to take a step back and focus on identifying the real objection. Here is what I do: I simply ask my client to set pricing aside for a moment and to not worry about it, to imagine that there are no budget limitations. Then, I ask: Now, that pricing is not an issue, are you willing to commit to that contract today?
The information that pours out is essential in helping you identify the underlying objections. You could hear anything ranging from: “Well, I am actually waiting for two more proposals that I need to consider” (trust and match for needs) via “I would still need to present this to the board“ (decision maker) to “I am not convinced that what you are offering is exactly what we need at this point in time” (value and timing).
This is how you can dig out that underlying objection, identify it and then work on overcoming it. And by the way, this is a rule of thumb that I use whenever I have to make purchasing decisions myself, I try to set pricing aside and decide whether (if price was not an issue) I would buy that product in the first place. Many times the answer is “No”. So, in a sense, we tend to subconsciously limit ourselves in our decision making by thinking “Well this is way too much money, I can’t afford it,” without thinking whether this purchase would bring us any value in the first place. Once value is clearly established and we are clearly convinced in it, the price tag becomes nothing more than that – just a detail in the normal life cycle of a business transaction.
It’s a setup
The customer is trying to set you up wittingly or unwittingly. Once you go into the pricing discussion route all you can do is lose. The question is how much and how long would it take before the customer squeezes until it bleeds and you place a boundary. And this process can be very energy-consuming and very sapping. It is essentially a losing game: you lose face (you discredit yourself), you lose money (through the discounts you are providing), you lose ground with the customer (they know they can manipulate you into anything now that you’ve showed them you are actually weak). So, why not swap things around and place that boundary very early into the pricing conversation? That way you can establish yourself as someone who is strong and confident, and as someone whose offering is of very high value.
It’s a trap
Pricing negotiation is meant to devalue your proposition. And this is quite ironic really, because by catering to your client’s needs for a “better price” you are validating their statement that you are not worth your pay. Which speaks of low quality and of being cheap. And that is downright scary and suspicious.
So, unless your goal is to position yourself as the cheapest company on the market, then there is absolutely no reason for you to worry that someone is going to be cheaper than you. That’s not what your focus should be: instead try to gravitate around the value which you are going to bring to your customer’s table.
Think hard about whether you yourself are convinced in your worthiness. If you aren’t then that’s a good place for you to start at. Readjust if you must, but please make sure that you or the people who are representing you are truly convinced in your offering’s value and that their focus is not on the money but on empowering and facilitating your clients to achieve their goals. Now, that is a mission to be proud of.
