Paul offers ten principles to help you navigate price objections in this changing economic tide.
Someone else’s opinion does not make your price too high. It’s simply their opinion.
“My competition is making me cut our price.” Wrong! Only you or your company has the power to cut your price.
Never assume your price is too high. Your competitor may just be desperate to sell.
Eliminate your team’s ability to discount! Salespeople will discount at the first sign of an objection. Don’t let them!
Nothing gives you greater confidence than a pipeline full of opportunity. What a negotiating edge to be able to walk away from a deal because you have ten more in the pipeline.
Did you enjoy the podcast? Go to Apple Podcasts to rate/review the podcast: https://podcasts.apple.com/us/podcast/the-q-and-a-sales-podcast/id1485103513. Click “Listen” then the “ratings and reviews” button.
Visit www.ToughTimer.com to get started on the 30-Day Tough-Timer Challenge!
Click here to purchase the latest edition of Value-Added Selling!
Interested in our public seminar offerings? Click here to learn more.
Thank you for tuning in. Our show is updated weekly with the questions you ask. So, please go to the home page to ask the question that you want answered.
Thank you to our production team at The Creative Impostor Studios.
Be sure to follow our show in your favorite podcast app and share this episode with a colleague or friend.
And most importantly…make it a big day.
Are you sick and tired of price objections?
(Transcribed from podcast)
Recently I’ve noticed in my seminars, salespeople are facing more and more price resistance, and I think this is due in large part to the changing of the economic tide.
As you know, the economy slows as we face what could be potential tough times. Naturally, customers are going to be more price sensitive and salespeople are going to face more price objections. So, in today’s episode, I’m going to share some thoughts and insights from Crush Price Objections. In this book, we highlight the, what we call, the pricing precepts, which is basically a set of rules, things to remember when you are handling price objections. So I’m going to share 10 of them with you today. And the whole idea is this will help you gain some perspective as you manage price objections, as you go out there and prepare to sell in a tough market.
Now with that said, Crush Price Objections is available on Amazon also. While you’re there, why not go with the trifecta? Get Crush Price Objections, you can also get Value-Added Selling as well as Selling Through Tough Times. So, all of those books are available wherever you get your books.
With that said, let’s get right into it. So here are 10 things, 10 rules,10 precepts to remember when you are handling price objections.
Number one, someone else’s opinion does not make your price too high. It’s simply their opinion. I remember this as a salesperson in the construction industry. I was working for the Hilti organization, great organization, premium tools, and, they’re usually not the cheapest. And I remember talking to a customer one day and introducing one of our newer hammer drills, and the customer said, “Geez, you guys are really proud of this one. This price is way too high.” And that individual was expressing their opinion, right? They were expressing their opinion. And so, it doesn’t make our price too high when someone thinks, “Oh wow, that’s higher than I expected,” or “It’s outside of what they can afford,” or “It’s not within their budget.” That doesn’t make your price too high. It’s simply their opinion. Keep that in mind.
Number two, just because someone raises a price objection doesn’t mean you must lower your price. Think about that. I know that sounds rather obvious, but when a customer gives you a price objection, they’re stating their opinion, as I just mentioned. And just because they’re giving you their opinion that the price is too high, it doesn’t mean you automatically, knee-jerk reaction, must discount your price in order to win the business. Our research shows that 25% of salespeople do not discount when the buyer gives a price objection. So there is hope. Alright, there is hope.
Number three. No one cuts your price. You alone do that. Your competition may cut their price, but only you can cut your price. I am sick and tired of hearing salespeople say, “Oh, I have to cut my price because of my competition.” “My competition is making me cut our price.” “The customer is making me cut our price.” That is a failure to take ownership. You alone have the power and the control to cut your price, and you have the power to hold the line. Take ownership of it. Realize that, yes, your competition may do something, your customer may ask for it, they may even demand a price cut, but it’s your decision. You are the one who has control.
Number four, when the competition does something stupid with their price, don’t compound their mistake with your own. It’s shocking to see some of those low-cost, cheap providers. They bring no value. The only thing they do is flood the market with cheap product and cheaper prices—that’s what they do. And oftentimes, it’s a feeble attempt to try to gain market share or to win business, or they’re just—. I mean, it’s pretty moronic. They go out there and they think, “Okay, the more I can sell, the more profitable I’m going to be.” And that’s true if you can hold the line, but they somehow think that, “Okay, I’m going to make it up in volume.” You can’t. I don’t need to bore you with the data, but when you are selling at just stupid low prices, you’re losing money. Don’t compound their mistake with your own.
Number five, whoever is better prepared for the price negotiation emerges victorious. We know that preparation is key. When you hear the same type of price objection, you shouldn’t be caught off guard by it. You should be prepared for it. In fact, again, our research has shown that 95% of top-achieving salespeople routinely plan every call that they go on. Not only that, you’ve got to remember that many of your savvy buyers, these businesspeople that you’re interacting with, if they meet with you, they’re also preparing for the meeting. They know that if they can give you a price objection, if they can make you feel the pressure, if they are better prepared to give the objection than you are to handle it, they’re going to win. So, we need to prepare. Think about the potential price objections you could experience, then practice and role-play. Working through those objections, that’s going to be critical.
Number six. Never assume your price is too high. Maybe the competition is desperate. Just yesterday, I was in Chicago hosting a full-day workshop and, in this workshop, we actually had a procurement manager/operations manager, which is always exciting. I love when procurement people sit in on sales training. They can usually offer some great insight, and really great advice for salespeople as well.
Now, we talked about pricing, and we talked about the role it plays in building perceived value, and here’s what, here’s what the procurement guy said. He goes, “You know, when I’m looking at a competitive bid, let’s say there’s three or four competitors, and three of them, they usually are around the same price. They’re going to be within 3 – 5% of each other. And that always, it makes it easier for me to make a decision.” He goes, “But there’s always that one supplier that will come in, and like, they’re 30% less than everyone else.” And he said, “Whenever I see that, it screams desperation. Maybe they’re desperate to get business, or maybe it’s just an indicator of their quality.” But he said, “I never go with that cheap price.” He goes, “Yeah, 30% less,” he goes, “You know, it’s just not going to give you the value that you need.”
So never assume your price is too high. Maybe the competition is desperate. And I remember another salesperson said once when he was overcoming a price objection where again, the competition was desperate, giving just this absolute bottom-of-the-barrel pricing. And the salesperson said to the customer, because the customer said, “Hey, can you match the price? Can you do this?” And, “You know, we’re thinking about going to that supplier.” And the salesperson said, “Well, you know, the prices are always the cheapest right before you go out of business, right?” And what he was doing, he was calling attention to the fact that, “Hey, all they’re doing is offering you a cheap price. They’re desperate. Do you really want to work with them?” So think about that again. Never assume your price is too high. Maybe the competition is desperate.
Number seven. This is a, just an important precept. Remember, people generally ask for more in a negotiation than they reasonably expect to get. Okay? Anyone with children knows this. You’ve seen it, you’ve experienced it. We just finished up Halloween, and so, our girls were packing their lunches and one of my daughters said, “Dad, can I have five pieces of candy for lunch tomorrow?” “No, you can’t have five pieces of candy.” And she said, “Well, could I have two?” “Sure, you can have two.” Now I’ve got to think, (and at some level I’m proud of her for doing this), she knew to ask for more, right: I’m going to ask for five pieces of candy knowing that it’ll be easier for my dad to say yes to two. Customers do the same thing. People ask for more than they expect to get. So keep that in mind.
Number eight. The number-one reason salespeople cut their price is because they can. I would encourage every sales manager, sales leader, business owner listening to this podcast, eliminate your team’s ability to discount. Simplify their lives by telling them what the price is going to be. Salespeople should not have ultimate authority over pricing. And number one, it’s because pricing impacts profitability, and profitability is strategic. We need to be profitable, and so why would you let salespeople have that level of control?
Not only that, the closer you are to the deal, the more desperate you feel to make the deal happen. Remember that. When a salesperson is working on a deal and they’ve been working on it for months and months and months, they have so much time invested, they’re willing to do anything to make sure that deal goes through. They’re more likely to discount. So make sure you eliminate their ability to discount. And even if you’re not going to do that, tighten the discount parameters. I remember one company I used to work for, as salespeople, we were allowed to discount up to 55% off list price without getting managerial approval. Guess what the most common discount percentage was—55%. The number-one reason salespeople cut their price is because they can.
Number nine, this is an important one as well. Remember, when the buyer is giving you a price objection, if your deal was all that bad, then why are you still in the game? We were hosting a two-day Value-Added Selling program at my training center, and I remember, this is a group of salespeople in the packaging industry. So, it’s a competitive industry, very price sensitive. And, the salesperson was working on a large deal—a significant piece of business for their company. And he’s trying to navigate that as he is going through this two-day training. And so, he had to step out a couple of times to take phone calls. And at lunchtime, he was talking with some of the more experienced sellers, and here’s what happened.
He said, “Yeah, you know, the procurement buyer’s been calling me, sending me emails, asking me, ‘Hey, did you get that final price? Were you able to get that discount? Were you able to do this?’ The procurement manager was desperately reaching out to the salesperson to see if they were able to get the price because they wanted to make a decision. And so, this salesperson was freaking out. You know, “What should I do? Should I cave in? How are we going to be able to make this happen?” And one of the salespeople finally said to him—one of the more seasoned, experienced salespeople said, “Hey, have you noticed that they keep calling you? They’re desperately reaching out to you and begging you for this discount. If your deal was all that bad, then why were they calling you back in the first place?” And what happened is that the salesperson said, “You know what? You’re right. They’re feeling a lot of pressure to work with us. We’re the incumbent provider. We’ve had a great relationship. We create a lot of value. The cost to switch would be significant.” And the salesperson ended up holding the line. They did not discount. Remember, if your deal was all that bad, why are you still in the game?
And finally, number 10. Ten is my favorite. Nothing gives you greater confidence than a pipeline full of opportunity. There is nothing, I believe, more freeing as a salesperson than sitting down to a deal that you could easily walk away from. And the reason it’s easier to walk away from some deals is because you know you’ve got 10 other deals that you’re working on right now. That gives you a significant edge when you are negotiating. You’re able to negotiate with more confidence. You walk in there knowing that, hey, if you don’t win this deal, it’s not the end of the world. Remember that nothing is going to give you more confidence than a pipeline full of opportunity.
Remember these 10 precepts when you are managing price objections. It’s going to equip you mentally and also with the right skills to go in there and sell more profitably.
Make it a big day.