Handling Price Objections

The price objection that is the one that we hear most often and it’s so important that we have a way in dealing with it.

The following simple 3 step process is one that has proving itself to us and our clients over many years and could be a great option for you to keep in your pocket in case you ever need to use it.

Step 1 - Find out if it’s a real objection

We do this by asking the customers what they are comparing us to. Many times we have found that people are simply trying to get a better deal because it’s part of who they are and they perceive it to be a natural progression in negotiating. Even if you’re the cheapest in the marketplace, it does not mean that someone will want you to be cheaper.

So perhaps if you ask the following:

“Okay Mr. Customer, you think we are a little expensive but could I ask compared to what?”

We are asking the client to be upfront about what they are comparing us to. It’s amazing how often they start to hedge around this. By asking our clients to declare what they are comparing us to, we find out if they actually are just comparing prices or they are simply trying to get us to lower our price as a tactic.  

Step 2 – Establish how much too much you are too expensive

Too often we see people when confronted with the declaration they are too expensive drop their prices far too much. What would happen if you are selling an item at $295, the client said you are too expensive, and you dropped your price to $245 only to have the client say “Wow! That’s a great price. Your competitions is $290.”

To drop the price too fast and too much is an emotional reaction to the price objection. We need to find out what we are up against so that we can still make some profit and be competitive with the opposition.

Step 3 – No one says we have to be cheaper than the opposition

It’s natural for most people to want to be cheaper than the opposition to get the deal – but often unnecessary. Sadly, this then puts us back into a situation where we are simply fighting price versus price and the lowest one wins. This will erode your value proposition very quickly and lead you to a Dutch auction. 

Instead you could ask “How close do I have to get to do the business.” If you have added additional value, features or can differentiate your product in any way, you can justify why you are a little more expensive.

Either way, it means that you are not giving away profitability unnecessarily and will maintain your value integrity.

These 3 questions were proven themselves over time and have saved our customers a lot of profit and heartache. Remember that the price you set today is the one that forms of basis for every negotiation that goes forward from this point.

Setting to low a price too soon is a burden that you will have to bear for many years to come.

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