Paul tackles this common price objection with five tips.
Did the buyer know the cost of your solution before setting their budget?
“Give the buyer the opportunity to ….”
Budgets are flexible.
Remind the buyer of the extra revenue your solution will help them generate.
“Get to that !”
Is your price too high, or is their budget too low?
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How do I handle a budgetary price objection?
(Transcribed from podcast)
On today’s episode, we’re going to talk about price objections. In fact, there’s one in particular objection we’re going to discuss. This came from a recent virtual training seminar I was conducting with a sales team and the salesperson asked about a budgetary price objection. Specifically, here’s what happened. The salesperson presented their price and their customer, their key decision maker, just said, “Look, we just don’t have that money in the budget.” So, this salesperson is experiencing that lack of money-based price objection. That’s what we’re going to discuss on today’s show.
Before we get into that, though, a quick shout-out to Andrea over at The Creative Impostor Studios. If you’re considering a podcast—wanting to start one out—get in touch with Andrea. She does an absolute wonderful job. We’re going to have a link to her website on this episode’s web page. So, make sure you check it out. Again, all things podcasting, Andrea is your go-to person.
With that being said, also pick up your latest copy of Value-Added Selling. In Value-Added Selling, in one of the last few chapters, we focus on handling price objections—help you understand that the different types of objections you’re going to experience. So, pick up your copy. It’s available on Amazon, wherever you get your books. Make this your best year ever. You’ve got start with feeding your mind with all the right stuff. So, pick up a copy.
All right, let’s get back to that question: How do you handle the budgetary price objection? Well, there’s five things we need to do to really help you overcome this objection. Now, the first thing we’ve got to do is we’ve got to bring the buyer up to speed. What I’ve found just from my personal experience, and also with training and coaching salespeople, is that customers tend to set their budgets without really getting any feedback from salespeople. For example, in this instance where the customer said, “Hey, look. We only have this much in the budget,” there’s a good chance that that customer set their budget without consulting with you in the first place, so how would they know what number to put in there? So, we need to bring the buyer up to speed.
Also, this helps them save face a little bit. So, my first tip is to bring the buyer up to speed. That means you educate them on what your product or your solution will actually cost them. You have to educate them, explain it, and also, give them an opportunity to save face at this point. At this point, the buyer may have selected a budget and they weren’t sure what to put in there so made their best guess. Give the buyer an opportunity to save some face. Let them know, “Hey, I should have gotten involved earlier in the process to help establish the budget. But now that I’m here, let’s work through this. Here’s what it’s going to cost. How can we get this budgetary number put in this year’s number?” So that’s what we want to do. We want to bring the buyer up to speed. We want to educate them and explain our solution, explain the cost, and also discuss with them how you can get that number in the budget.
Second thing we need to do, let’s give the buyer permission. Let’s give the buyer permission. You know, sometimes people need to know that it’s okay to spend more than they expected to. When we think about that, it’s like we put together a number, we put together a budget and we believe that it is written in stone. That’s not the case. Budgets, by their very nature, they are flexible based on what happens—the demands. I mean, think about the pandemic that we just went through. How many corporations had a budget for masks and hand sanitizers during that pandemic? Very few, right? But they found money to make it happen because it was critical. So, remember that budgets are flexible and it’s okay to give that buyer some permission and say to them, “Look, I understand that this number might be outside of the budget range that you initially set. But in certain cases, it’s okay to go outside that budget.” If you truly believe this solution’s going to help your customer, then let them know it’s okay to go outside of that budgetary number.
The third tip: sell the ROI. Sure, the customer may not have expected to spend outside of their budget, but also think about the extra revenue that your solution will help the customer generate. I was working with one group and they’re selling equipment and their equipment could machine parts and in a specific industry that their competitors could not. However, their solution cost a little bit more than that competitor’s. However, because their new solution can produce parts in a specific industry, that created a new revenue opportunity for that customer. That means that their product might be outside of the budget, but the extra revenue that they are going to generate is also outside of the budgeted revenue they anticipate it. So, it’s really an equalizer type of event. And in fact, you could argue that they’re better off spending more because they’re going to be able to make more as a result of it. That’s how you sell the ROI. Remind the customer that your solution will increase their budgeted revenue in even greater proportion than the increase in budget.
All right, number four: look for ways to pool different budgets together. Remember that money spends the same, whether it’s in the travel budget, in the training budget, in the equipment budget, it’s all money. And one thing has taught us this past year is that companies are flexible in how they spend their money. Companies were willing to invest in more because they could take from certain budgets. The key is, remind the customer that it’s okay to pool from different budgets.
When they tell you, “Hey, we just don’t have this in the budget.”
“Okay. Well, let’s look at other areas where there’s a potential surplus. Where can we find the money?”
That’s what we want to do is we want to help them think differently, help them team up with some of their colleagues to find different budgets that are available. And also, that means your company has to be flexible on how they invoice. Remember that companies have policies in place where they have to pay from certain budgets. And when they get over that certain budget, that might send up a red flag. Well, let’s say your solution is $12,000 and they’ve got $10,000 in the budget. Send them an invoice for $10,000 for part of it and maybe $2,000 that they can pool from a different budget. You obviously want to carry yourself ethically and with integrity, but being flexible to help a company get around some of their policies and procedures is okay. So, you’ve got to be flexible there.
And the final tip: get to that high-level decision maker. If there’s not enough money in the budget, go to the person that creates the budgets. It’s really straightforward and simple. I remember several years ago, I was working with a client and they said to me, “You know Paul, we love the training. We love everything about it, but I’ll tell you, the price is just outside of our budget,” and I was talking to the owner of the company. And I said, “Okay. I understand that. You’re the owner of the company, aren’t you?” And he said, “Yeah.” I go, “Well, great. Increase your budget.” He goes, “You know what? That’s a good point.”
If you think about how simple and straightforward it is, but you’ve got to be able to challenge that buyer. Here you have the owner of a company saying, “Hey, that’s just outside of our budget.” “Okay. Well, increase the budget.” It’s not that my price was too high, his budget was just simply too low. And they set that budget before we had initially discussed what my fee or price was. So, you have to meet with the person that sets the budgets. That’s going to help you free up more dollars, and it’s also going to help you move your sale forward.
Okay guys, that’s the tip for today. Again, the question was, “How do you handle that budgetary price objection?” Number one: bring the buyer up to speed. Number two: give the buyer permission to make that decision. Number three: sell the return on that investment. Number four: look for other budgets where you can pull different money together. And finally, have that high-level conversation with the person that controls the budget.
Make it a big day.