Too often, buyers will focus on price before you’ve had a chance to prove your value. In this episode, Paul shares some ideas to proactively take control of the sales conversation.
How do I avoid price too early in the conversation?
(Transcribed from podcast)
In a recent training seminar, we had a salesperson ask us, “How do I keep the pricing conversation from coming up too early?” That’s the basic question: How do I avoid the pricing conversation from coming up too early before I’ve delivered value? That’s a big challenge. We’ve all been there. The customer says, “What’s your price on this product?” Or, “Hey, save your breath. I don’t need to hear about all the value, just give me the price.” Anytime the customer beats you into a pricing conversation before you’ve proven the actual value, your price is going to be too high, no matter what it is, because they’ve yet to really understand what it is that you actually do for them.
We’re going to help you answer that question today. We’re going to give you a simple framing technique that will help you change the conversation away from price. But, before we get into that, we need to give you a little background on value, because when you talk about price, you’ve got to change the conversation to value, so you need a little understanding of what value really is.
When your customers are making buying decisions, they’re looking at four variables: Price, Cost, Utility, and Impact. Price is what you charge for your product or service. It’s pretty straightforward. Cost is much broader. Cost is what that buyer really sacrifices. Utility is what your product or service actually does. Impact is how it really affects the buyer. Looking at those four variables, your customers and prospects are weighing and measuring the price they pay versus what they receive in cost savings, utility, and impact. Let’s get back to changing that conversation. We’ve all been there. The buyer says, “What’s your price on this product?” Many salespeople can get caught off guard. They don’t know what to do. They scramble. They look for their pricing sheet. They somehow think that this is an opportunity because they’re asking about price…They must want to buy. In reality, they’re using this, maybe even as a negotiating tool, just to throw you off your game and focus on price. We have to redirect that conversation. When the buyer talks price, change the conversation to cost. Let me role-play how to change the conversation from price to cost.
The customer says, “What’s your price on products X, Y, and Z?”
As soon as they ask about price, we don’t want to just start listing price and value discounts or, where did we need to be to get your business. We need to redirect the conversation to cost. Here’s how we would respond: “Mr. Customer, I get that price is going to be one of the factors you look at when you make this decision, but, the reason you’re asking about price is because you’re really concerned about saving on your total cost here. Is that right?”
Once we ask that question, “Is that right,” of course, they’re going to say, “Well, yeah. I want to save on my total cost.”
“Okay, Mr. Customer. Here are some examples of total cost…”
You can talk about labor cost; that’s a very obvious example of cost. If you offer a product or service that reduces labor, then you’re saving them their total cost. You can talk about engineering cost. Think about using your company’s technical resources to help create a better solution than the customer having to use their own internal resources. That’s one way you help save on total cost. If your product or service reduces long-term energy spend, that’s another form of cost. Think about reducing the time, aggravation, energy. That helps reduce that total cost. So, as a takeaway—an action item—on paper, I would list out all the ways that you help save the customer’s total cost.
That is how you change the conversation away from price. We don’t go right in and say, “Here’s our price for this product.” We change that conversation to cost. Once we’ve had a chance to explain a little bit more about our total cost, here’s how we then shift the conversation further: “For me to get a better understanding of how we can help save you more time or more money in the long run, do you mind if I ask you a few questions?”
Now, we’ve taken a customer who’s purely focused on price, we’ve changed the conversation to cost, and then, we shifted the conversation even further into asking them a few questions. At this point, we’re able to enter the discovery or probing phase—the needs-analysis stage—and we’re able to look at some questions that can help generate a much better discussion.
As a recap, when the buyer talks price, change the conversation to cost. How you do that… as soon as they say price, you acknowledge it and say, “I understand price is going to be one of the factors you look at when you make this decision, but you’re concerned about price because you really want to save on your total cost. Am I right?” The buyer’s going to agree to that. Then, you launch into all the ways you help save on total cost. You, then, shift that conversation even further into asking a few more questions to understand what total cost means in their business.
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