What to Do When a Prospect Has Price Objections
One of the scariest moments in a sale is that instant when you finally tell the prospect how much their purchase-to-be will cost. That's when you brace yourself for the prospect's eyes to glaze over and for her to utter the dreaded words, “That's too much.”
Salespeople often react by trying to bribe the prospect out of her stand. Either the salesperson immediately cuts the price, or he offers a special deal – an upgrade at no extra charge, a second product thrown in at half price, etc. But surrendering immediately to a price objection is not the best way to handle the situation. In fact, cutting the price on your product is the least desirable reaction. First, it teaches your new customer to devalue the product because the more someone pays for something, the more he tends to value it.
And second, cutting your sale price takes money out of your own commission. Salespeople often reason that a discounted sale is better than no sale at all, but price-cutting should still be your very last choice.
Product Knowlege Is Your Best Defense
The best defense against price objections is product knowledge. A salesperson who can explain why the product costs what it does and what factors go into setting that price can often defuse price objections at the start. Many prospects who raise price objections do so because they're afraid that you are trying to overcharge them. A clear and reasonable explanation will do much to settle these fears.
Savvy buyers will often throw out a price objection regardless of how they truly feel. It's a way for them to see if they really are getting a good deal, or if they can squeeze some concessions out of the salesperson. Stand firm and say something like, “Ms. Prospect, I always offer the very best price possible to my customers the first time around. If you're concerned about cost, we can look at a more basic model instead.” If the buyer is just testing you, this is usually enough to resolve the objection.
Of course, some buyers really will have trouble meeting your price. In that case, there are ways to help the buyer without slashing your price. Perhaps an extended payment plan will do the trick or a slightly less fancy but less expensive product that would be a better fit for the prospect's wallet. Cost concerns are often rooted in time, meaning that the prospect doesn't have the money now but will have it shortly (after the next paycheck or the next budget cycle).
Prospects who reject every attempt to help them meet the cost, and/or who triumphantly tell you about competitors that charge much less for a similar product, are a tougher nut to crack. These prospects are usually highly price-conscious people. Their main concern is paying the smallest possible amount of money for a product, regardless of other factors. If you find yourself selling to such a prospect – and sooner or later, you will – say something like, “I appreciate your concern, but my company offers a higher level of quality and service than Company X and as a result, we do charge slightly more.” Give specific examples if you can.
For example, you might point out that your product comes in a choice of three colors while Company X's product only comes in olive green.
When to Walk Away
You won't always be able to “win” a price objection. If a prospect refuses to consider anything but a price cut, then it may be time to walk away. Yes, you will lose the sale, but you will also save yourself from someone who will almost inevitably be a difficult customer. Having browbeaten you into giving in on the price issue, such a customer won't have much respect for you and won't hesitate to make unreasonable demands in the future.