In this episode, Paul shares four reasons why buyers object to your price and how to respond to objections.
Do you know the number one reason why buyers object to price?
Can you explain why your solution is different? When buyers think you’re the same, it’s not a real price objection.
If you don’t have the money, it doesn’t make your price too high. That’s why I couldn’t buy the $120 million mansion.
Give people more of what they are fearful of misusing.
Drumroll, please, the number-one reason is.
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What are the top four reasons buyers object to price?
(Transcribed from podcast)
Today, we’re going to talk about price objections. In fact, in a recent training seminar—a live training seminar. I’m not kidding you. There was actually people there—face-to-face audience. We talked about price. Pricing came up, and one of the salespeople asked, “Why do buyers object on price? What is the primary driving force?” So we’re going to share those reasons. There’s four of them to focus on. So that’s what we’re going to focus on in today’s show: Why do buyers object on price? We’re going to give you four reasons.
Before we get into that, a quick shout-out to Andrea over at The Creative Impostor Studios. If you’re thinking of starting a podcast, if you already have one and you just need help, you need that support, reach out to Andrea and her team. They do an absolutely wonderful job. They’re here to support you. They’re here to provide insights to make your podcasting experience better. She is there. She’s going to help. We’re going to have a link to her website on this episode’s webpage.
Also pick up your latest edition of Value-Added Selling. If you’re a seller struggling with price, Value-Added Selling is your go-to guide to sell more profitably. So it’s available wherever you get your books. Check it out.
With that being said, let’s get right back to that question: What are the top four reasons why buyers object on price? We’re going to go in opposite order. I don’t need to start with the very first reason. I want to build it up. So let’s start with number four. The data I’m going to share with you—. A few years ago, we did a study. It was about 300 or so buyers, and we wanted to gather feedback on how they object on price, how they make decisions, what’s important to them, blah, blah, blah, all that good stuff. So we did this basic survey and when it came to pricing, we had about, I think there was about 30 variables they could choose, and they were basically answering, “Why do you object on price?” And there were 30 different reasons why. So those sub-categories, those responses, were categorized into key areas. And based on the number of responses that were circled the most, that’s where we developed these four driving forces.
Enough about that. I mean, if you’re really interested in it, we could have a conversation about the data, how we collected it, all that good stuff, but keep in mind, we’re not, doing medical research here. We’re, getting information for salespeople. So with that being said, this is the fourth in rank order. Why buyers object on price is because of a lack of differentiation. In our responses, people would indicate, “I don’t see much of a difference between the two products.” That’s one of the reasons they would object on price, or “I don’t see much of a difference between the sellers of these products.”
So that is what we call a lack-of-differentiation objection. It doesn’t necessarily mean your price is too high, the buyer is just saying, “I don’t see the difference. I don’t see why I should pay more.” So if you’re talking to your customer and you get the sense that it’s a lack-of-differentiation type of objection, be able to detail and explain what makes your solution unique or what makes it different. Do you have additional services that you can provide that maybe your competitor does not? Be able to explain those key differences? That’s the fourth reason.
The third reason why buyers will object on price is lack of resources. They flat-out just don’t have the budget or the money to buy your solution. In the response, people would indicate, “I have no budget for this,” or “This is outside of my budget.” So that’s what we call a lack-of-resources objection. Remember that if the buyer doesn’t have the budget to buy your solution, it doesn’t make your price too high, it just means they don’t have the money.
For example, the other day I was reading an article. It was in the Wall Street Journal in their “mansion” section, like where they put high-end real estate that’s for sale—homes. There was like a home going for $120 million. I was like, “Wow, that I got to see this place.” And they had pictures on there and all that. If I called up there and said, “Hey, man, I just don’t have the budget for this, but man, I would really love that house. Can I have it?” They would say no. And the fact that I don’t have the money—I don’t have the $120 million or whatever to shell out for that house—that doesn’t mean that the price of the home is too high, it just means I don’t have that money to buy that home. It’s a lack of resources.
And so when we’re working with sales teams, what we’ll obviously work with them on is, “How do you define the ideal target?” The person selling the $120 million home, they’re not trying to sell to guys like me. They’re going after the billionaires and all those people, that’s their ideal market. So when you’re trying to prevent budgetary type of objections, make sure you’re focusing on the right business from the very beginning.
Let’s get to number two. Man, can you feel the anticipation? We’re getting closer to number one. Number two: fear and scarcity—fear and scarcity. Anytime you have a scarce resource like money, people are afraid of misusing it. And that’s what they indicated in our survey. “I don’t want to overpay” or that, “I don’t want to pay more than I think I should.” That was how they were responding. And so that’s a fear-based mindset. They’re fearful of misusing money. So the best way, the absolute best way to overcome a scarcity-type of objection, where they’re just afraid to spend money, give people more of what they’re afraid of misusing. Be able to demonstrate how what you are going to sell them, your solution, is going to help them make more of the resource that they’re scared of losing to begin with.
Let’s say you’re selling like air compressors that are going to improve the efficiency of a manufacturing facility. They’re going to have to spend some money on this. And let’s say the buyer is hesitant to spend the money because they’re fearful of just misusing a resource. Make them aware of how your solution is going to help make them more money in the long run. Again, if a buyer is fearful of using money, show them how your solution is going to give them more money. Be able to demonstrate it, prove it.
And here we go. Alright guys, we’re already close to number one. We’re only a few minutes into the podcast. Can I get some drum roll, please? A drum roll-some anticipation. All right, here, here we go. [drum roll sound] You know, it makes me think of a Christmas Vacation, you know, when they’re doing the lights and all that. Gah, I love that movie, man. I might have to watch it. I mean, here we are, it’s April 15th—Tax Day. Something to cheer me up. Maybe I’ll watch Christmas Vacation. I know it’s not Christmas, but heck, you can watch that movie whenever.
Anyway, I digress. Enough of the anticipation and enough of the buildup. The number-one reason why your buyer is going to object on price is because of a lack of equity—a perceived lack of equity. They just don’t believe it’s fair. They don’t believe that what you are charging is worth what they’re receiving. That perceived lack of equity is the number-one reason why buyers object on price.
So think about how we can influence that as salespeople. If you’re selling a product and it costs $100, but the customer only believes it’s worth $90, some salespeople are going to say, “Okay, well I’ll just lower my price and make it $90. That’s in line with what you expect. Now, it’s going to feel fair.” Yeah, that’s one option. It’s going to cost your company a lot of money. It’s going to cost you a commission. Instead, what you need to do is demonstrate how your solution is equitable. Be able to explain it; build in that perceived value. Be able to add more value and bundle in more value-added extras to help the solution seem worthwhile.
For example, if the customer says to you, “You know, hey, it just didn’t seem worth it.”
“Really? Okay. Well, let’s talk about this for a moment. Is it more of a question of the price, or is it a question of what you’re really getting for it? Because I’d be happy to explain the outcomes—what you’re going to achieve—but also what we can do to help you make more money and what we can do to help you save more time. Let me share some ideas on that.”
The key is, when we’re talking about fairness and equity, it’s a delicate balance. Buyers are weighing out what they sacrifice and what they gain, and if they don’t believe it’s fair for what they gain, they’re going to complain about price. They’re going to give you a price objection. So be able to demonstrate the fairness of your solution. Be able to explain in detail all the value that comes along with it. And by doing that, it’s going to seem fair.
Make it the big day.