The Best Way to Handle a Price Objection

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The absolute best way to handle a price objection is to structure your sale so you don’t get one. Price objections arise because buyers are unaware of the price range they are looking at for their purchase, or don’t see enough value in your offer to pay your price. Take a value-based approach to your selling and you can short circuit both of these.

In business to business selling there are many ways to handle the price conversation. The worst is to address it late in the game, with trepidation. This generally causes sticker shock in the buyer’s mind – an irreversible condition. Once afflicted they – and you – can never get past it. Your deal digresses into a haggling session you’d rather not have.

The best way is to address price early in the sale, in a comfortable and candid way. Dip your toe in the water and check the temperature. If things look good, carry on with the sales conversation. Address price thoroughly after your buyer’s Pain-Gain-Value needs have been diagnosed [for more on value-based selling click here. When a price or fee is put beside a buyer’s expressed needs it makes much more sense to them. They can most clearly see what they are getting for what they are paying.

Here are some sales approach specifics you might find helpful…

Your first sales conversation with a buyer should consist of a hearty diagnosis of their Pain points, a clear statement of what they are trying to achieve by fixing them [Gains], and a list of the Value they are looking to get by doing so. Once all of this is on the table it’s a good idea to say something like “Thanks for sharing that with me. If I’ve heard you right where you are at is [repeat what they told you].”

Wade into the price conversation with “Given what you want to fix, what you want to accomplish and the value you are looking to get, the price range you are looking at is approximately $XX/between $XX and $YY. How does that sound to you conceptually at this point? I’m not looking to nail anything down just yet. I just want to see if we’re on the same page regarding the spend.” This approach will get you into the price conversation early on, and help you determine if your buyer is operating in reality or if they want a Cadillac at Ford Fiesta prices.

If you and the buyer are miles off on price range, you’ll need to have the “I think what you want to accomplish and what you want to spend aren’t in line right now” conversation. This will end with your buyer adjusting their purchase objectives, you adjusting the scope of your solution or you referring them to a lower cost provider.

If you are both aligned on the price range carry on with your sales conversation. Learn the specifics of their needs to the point you can build your solution. When it’s been built and the time comes to present your final price/fees do it this way… “The major Pain points you outlined to me were [insert Pain point here]. What you are trying to achieve by fixing them is [insert Gain here]. Underneath it all, the Value you want to get by doing so is [insert Value here]. Am I correct with my summary?”

This question will help confirm if your assessment of their situation is accurate, and sets up your presentation of the price.

If your assessment is in fact correct, carry on to say “Given all of that, the feature[s] of our solution that will deliver on that are [outline your solution features here].” Then ask “does that make sense to you so far?” If it doesn’t, take the time to review things with them until you get aligned. Once you get aligned then say, “here is the price for this solution [state price here].”

This approach takes your buyer through a very distinct journey prior to getting to the price destination. They get refreshed on where their Pains lie, what good looks like when the Pain goes away and the Value they’ll get by proceeding with their purchase. They are totally clear on what they are getting for what they are paying as they consider the final price.

This sales approach significantly lowers price objections. First, you have weeded out buyers up front whose budget is below what you’ll charge. Second, for those that make it through the sales process you’ve clearly connected value to price paid.

Of course, there will still be buyers who will balk at whatever you charge. If haggling is an accepted part of your sale then have your strategies ready to deal with that. Otherwise, stick to the value-based road. It’s a much smoother ride.

Selling With One Hand Tied Behind Your Back

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The Internet era has revolutionized our communication. It has revolutionized the way many people sell, too, and not for the better. When you sell using email and the like, you are selling with one hand tied behind your back. This is not the position you want to be in for any competitive situation.

The statistics related to communication effectiveness are well known. Ten percent or so of our message is conveyed by the words we use. The remainder is relayed by our tone and body language. Email limits our communication and thus sales effectiveness proportionately.

Email can be a nice solution to large geographic territories, the expectation of instantaneous response, and the navigation of time zones. It can be a handy way to convey data and facts (e.g., “To confirm, we are set to meet next Tuesday morning at nine.”) Beyond that, it has profound limitations, the most dangerous being that it is an unemotional one-way medium.

When an email is sent (e.g., “Attached is our proposal; please let me know what you think”), there is no way to tell how the receiver truly feels about its contents at the moment it is received. This is dangerous because although your customers shop logically, they buy emotionally. Selling by email helps your buyer to shop, but not to buy (your products or services, that is).

When you sell by email you can’t help your buyers in their moments of need. This will result in fewer closes as they go with the company that takes the time to talk to them.

Your job is to make a human connection with buyers and help them navigate the yes/no decision regarding their deal. Selling by email says to the buyer, “You are on your own,” regardless of the actual verbiage contained within the message.

When put in this position, most buyers will commoditize your offering and simply rank it by price and features versus the other “bids.” They may assess the value your offering brings, but they will use their own yardstick, not yours. If they have any misunderstandings, misinformation, or knowledge gaps, those will remain unaddressed.

How your buyer perceives the value of your offering is critical to your success. Price is more elastic when the perception of value is high. Profit is thus similarly affected. Small differences in features (e.g., your model does not come in red) are more easily overlooked by buyers when they are clear on how the value you can bring matches their needs.

Helping a buyer see how your offering will meet their needs and deliver value is an iterative process requiring two-way communication. Sellers who rely on email short circuit this process and lose more deals than they win.

Email is hurting your sales effectiveness if you are…

Emailing out your quotes or proposals: This is a sales killer. Your buyer needs help interpreting your quote. Misinterpretation may make the competition’s quote look much better. Help your buyer choose you by presenting your quote person to person (by phone or face to face).

Responding to buyer objections by email: Even if the buyer communicates an objection by email, phone them back to stop this exchange before it ever gets started. Handling objections requires questions and conversation (“I understand your concerns. Can you tell me what’s behind them?”). Conducted over email, such an exchange will suck the life out of your sale.

Negotiating price over email: If you weren’t commoditized by this point, you surely will be afterward. Pick up the phone or hop in the car for this sensitive conversation.

So, analyze your sales process. Pick the sales junctures at which person-to-person selling is a must and endeavor to make those interactions happen. In so doing you will ensure you can engage in hands-on conversational selling, rather hands-off ‘sales by email’. With both hands freed from behind your back, you will be infinitely more effective.

Be a Top Performer

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Top performers want to know how their sales progress is measuring up to their sales goals, and how it compares to that of their colleagues. Poor performers want to hide under a rock. Don’t wait for your boss to tell you how you are doing this month. Be a top performer.

Top performers exercise great initiative to learn exactly where their sales results lie. They regularly perform a few simple analyses that serve as their sales success barometer. In doing so, they position themselves to have more powerful sales coaching conversations with their managers than their teammates. Why is this so?

They don’t burn valuable sales coaching time trying to figure out where their sales results lie. They arrive with the analytical heavy lifting — their “homework” — done, which allows them and their Sales Coach to get right down to business, creating sales strategies and plans to close deals. This is both effective and efficient. Time with your sales sage is golden and hard to come by. This approach makes the most of each available minute.

Sales progress measurement for most salespeople consists of knowing their percent to sales plan and year over year sales. Up your game by performing a few uncommon assessments before your next sales coaching session: 

  • Born-On Date: Use the date you first touched each sales lead to calculate the length of time you have been working on closing it. Express this in days, displayed prominently within your sales tracker. Start your coaching conversation with “this lead is X days old as of today.” Looking at the start date for a lead is common. Expressing it in days and focusing on it acutely is uncommon. It develops a healthy sense of urgency to do something immediately to move it forward to closure.
  • Buyer Commitments To Date: Sales activities do not move deals to closure. Sales activities plus buyer commitments do. Listing what your buyer has committed to so far in a sale — e.g., sharing sensitive data, bringing in other key buying influences and senior executives, etc. — gives you a gauge of their current level of commitment to considering your deal. Low commitment = low likelihood of closure. Recognizing this early allows for strategy creation now, rather than later when the deal is stale or flat-lining.
  • Why This Buyer Might Say No: Confront the brutal reality by listing objections your buyer may be harbouring that will sabotage your deal. Wrack your brains and make this list exhaustive. Then, create strategies to minimize or eliminate each one. Doing this before objections are raised prepares you for any eventuality, and increases your effectiveness in managing them should they arise.

Great sales strategies are best created with more than one mind tackling the challenge. A sales coaching session is an opportune chance to create such synergies. A few minutes of focused planning prior to your sales coaching session will contribute to solid sales results, and inclusion in your company’s ranks of top performers.

Handling the “No Budget” Objection

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Ideas in this posting will help you: Save time in your sales process.

Your Buyer: “I’m sorry, I don’t have any budget to spend right now.”

You: “Oh really? I guess we will have to put this proposal on ice for now, huh?”

Ouch!! If you find yourself in a sales situation playing to this unfortunate ending, stop and do a quick rewind. There is an effective way to handle this common objection and maintain momentum on a revenue generating opportunity that threatens to grind to a halt.

Like others, the ‘No Budget’ objection often belies the true underlying concern. Behind ‘it may be “I don’t see that my problems are great enough to do anything about right now.” Or worse “I don’t see enough value in what you are offering to free up money to spend on it.”

Try this strategy: 

  1. Put the buyer’s stated lack of funds aside for the moment.
  2. Focus on displaying that their current needs are significant, and there are real downstream implications of not addressing them now.
  3. Show convincingly that you are uniquely qualified to help them avoid those implications.

Often budget can be found if a project is deemed to help a buyer avoid a big problem or capture a great upside opportunity. Demonstrate how you can help, in dollars and cents and an improved situation [that involves you]. 

Funds are regularly diverted from one project to another if the upside is determined to be big enough [I know of one buyer who put off hiring an FTE to divert those salary dollars to a project that was deemed to be of great upside to the company]. Your job is to articulate that upside clearly and compellingly.