We all deal with it, worry about it, and anticipate it before landing big sales: price resistance. If you had a dollar for every time a prospect looked to reduce your price, you could open a new company. Needless to say, price resistance comes with — no pun intended — the cost of doing business, but that doesn’t mean price is no object.
When price is the only issue, present the buyer with the lowest price option and win the deal.
However, when it comes to closing business deals, price is not the only issue — and it may only be used as a smoke screen. You are getting price pressure for a lot of the usual suspects that you already know — the buyer believes that they should push for lower price, uncreative people want more for less, and so on. It’s all a headache, which means the sooner you can get to the root of the problem, the quicker you can land key accounts.
So here’s the challenge: think of price in a different way. If you are not offering a commodity, price is a byproduct of other issues. You must be clear on these issues with the prospect or client so you can get control of the price discussion. Consider these points before you go in for big sale hunting:
Price is a reflection of confidence in outcome
If there were a 100% guarantee that there would be a resolution to a buyer’s business issue, then their willingness to pay the listed price could increase tenfold. When you get price resistance on your proposals, put your cards on the table and offer what you know you can provide: “If we could get you a $20 million increase in sales in one year, would it be worth a million dollar investment?” Their answer is almost always yes. Then you may say, “Well, this discussion is not about price then. It is really about your confidence in the outcome of this proposal.” Case studies, surveys, and specific data are needed to back up your claims; this will increase confidence in outcomes and allow you to more easily land large account sales.
Price is relative to business problems
If you are selling in the iron-triangle of Service, Quality, and Price, then you are not selling value that solves business problems. You are selling into a comparative matrix that boxes you into a same: same measurement with our competitors. When you solve business problems — Time, Money and Risk — then you are in a league of your own!
For example: a company sells programming services on a particular operating system. This typically means that they are being compared on a bid with other vendors by how many hours it takes to complete the job, and what the hourly rate is. In other words, they are a commodity in that market. However, they changed the conversation by saying the following: “If you need this project completed in a year, anyone in our industry can do the work. And if you need this completed in six months, we can give you a list of 5 firms that can do this work. But if you need this completed in less than three months…we’re who you should go to.”
By defining the business problem as a time problem, price became a smaller part of the discussion. Frame what you offer with specificity so you can make your place in the market and make price less of a business problem.
Price is tied to context
In the world of business solutions, there is no such thing as a true “apples to apples” comparison. That means that there is no valid comparison between you and your competitor in the area of price — you may, and should, each offer slightly different services. You wouldn’t ask a nurse to remove a tumor, or a neurosurgeon to cure a cold. What that means is that each company has their specialty; your job is to find businesses who most need yours and tailor it to their specific issues. Price, then, is about not just comparing yourself to your competitors but also finding how to make your service individual — and thus your prices bespoke.
Finally, know the difference between negotiating and haggling
The difference between negotiating and haggling is simple. Negotiating is when you are making adjustments in terms, conditions and scope of work between two parties. Haggling is when you are asked to do the same work as you have proposed, but for less money. Haggling won’t get you anything but disappointment. If your work is priced correctly, then any adjustment in price will require an appropriate adjustment in scope, terms, or conditions. Know your value — and why your services are priced at that value. You likely do not want to work with a client that does not understand that reciprocity. If they are hagglers, maybe they should call your competition.
On top of having expert interpersonal skills and self-motivation, your sales teams need to know the ins and outs of prices, what they mean to potential clients, and why they are marked where they are. Find solutions selling and leading a sales team by enrolling in Hunt Big Sales University.