How do you overcome price objections?
It’s rare for any salesperson not to be questioned about the price. Price objections are one of the most difficult things people in sales deal with on a daily basis. A clever buyer will ask about price out of principle if only because they are aware that the first offer is not authentic anyway.
However, this does not mean that they are not interested in buying. It also does not mean that they are not going to buy at the first price quote. Depending on the way you react when you receive that price objection will determine how frequently you can preserve value, price, and high conversion rates to close.
Price objections are something that will always be a part of your sales process. These days, buyers have become much smarter when it comes to buying the tools they need for their own business. That especially true if you are in the B2B industry, the number of objections heard will be quite high.
One of the most common responses you will receive from the buyer is, “I’m interested, but the price is a bit too much. What kind of discounter can you offer?”
If that does not work, they will start to use your competitors against you and comment on how theirs is cheaper. That will lead to them asking why should they use yours instead of the competitors.
In the case of sales reps, it can be easy to give in and respond with a reasonable discount to close the sale. However, that is not always the best response to this situation. In reality, it is a pitiful way to respond. After all, if your product has authentic value, the prospect will benefit even if they have to pay at full price.
There’s nothing wrong with giving out discounts or even negotiating a price every once in a while, but giving away too much will impact your revenue. Instead, you need to better clarify the value behind your product and re-emphasize the time, money, and energy the client will save by working with you.
For this article, I’m going to go over what you can do to overcome price objections.
Why are they not buying?
One of the most important things to overcome price objections is knowing why they are not buying. It’s normal for a prospective customer to ask for a price during the buying process. There are several reasons why your prospective customer is asking for a buying price.
- They are price shopping for the lowest cost
- They are aware that the first quotes price can be talked down
- They need to know how much budget to set aside
- It’s something that was ingrained into them to ask
If you end up in a price objection situation, that does not mean they are not going to buy your product. How you deal with the prospect when you receive a price objection will decide your overall success as a sales rep. Thus, you need to identify and establish the real reason why they are asking about your price.
Start by listening to the whole objection and make sure you don’t cut the prospect off during the middle of their explanation. Once they have finished laying everything out, only then can you begin to read between the lines and understand the real objection. This is one of the key steps to overcome price objections.
The next step is to gain permission to explore the objection further. This part of the communication will let the prospect know that you understand and genuinely want to assist them. If you do not receive any consent to go further into the subject, you may as well hit a wall cause your deal just halted entirely.
At this point, you can start asking questions and receive clarification. For this part, you want to restate their reasoning to make sure you totally understand so you can address the problem correctly and reassure the prospect that you wholly understand so they feel heard.
Lastly, show the prospect the exact value of what you are offering them. That is something I’m going to walk you through so you can overcome price objections.
The 5 Techniques to Overcome Price Objections
1. Bring the value of the price to the forefront
When conversing over your product, the discussion should not surround the price but instead on the ROI. Although there will be times when the prospect does not comprehend the entire value, so you need to explain the value to them.
Just remember that your product is only valuable as the customer perceives it to be. In order to overcome price objections, we must present the customer with the value they can obtain from using your product/service.
To get the prospect to purchase your product at your list price, you need to translate the values so that the return on investment is more than the cost. It should also be pointed out that the truth they are gaining does not always translate into money. They could also gain value from saving time, easing their employee’s jobs, and so forth.
If the price you are charging for your product or service is around $100, you need to be capable of showing how not spending that $100 is costing substantially more because of what your prospect could potentially lose.
You need to show your customers how using your product or service impacts their primary business metrics. Furthermore, you need to show how it also affects their most significant values and to what degree.
Being straight-forward upfront is a great way to overcome price objections.
2. Show the impact of your product or service
Most of your clients are not going to be aware of the value behind the product or service you are offering them. Before you can set a price in front of them, they need to be conscious of the value you offer them by convincing them to use your product.
If your product can save their business $2000/month, then any amount up to $1999/month makes it a reasonable investment. The same can also be said for added income.
If your product can make the customer an additional $10,000 on sale, the customer benefits from your service. Of course, they only profit if they are paying under $10,000. When your prospect objectives on the price the next time you talk, do not immediately become defensive or start handing out discounts. Instead, you need to start asking them questions and listen carefully to their response.
Take that moment to discuss with your prospect how your product or service will affect their business revenue.
Consider asking your prospect a variety of questions to guide the customer to understand the value your product or service holds. However, these questions will vary depending on your offerings. Here are some questions you can consider asking them:
- How is your company managing this activity?
- What is the monetary value of saved time?
- How much time would using our product save your company?
- Do you have any costs that would be reduced by using our product?
- What would it take to have our service pay for itself?
By going through these questions with your prospective customer, you can both calculate the actual value of your product or service. If it shows that it pays for itself, your prospective customer should have no remaining objections to paying the entire price. At the same time, if the clarity is obscured around the actual value of your product, then discounting or readjusting your price structure may be your only option.
To ensure your customers understand the value of your product or service, consider using the case studies. These case studies can show them how much they can save each day by using your solution. Or the case study can show them how your past client faced a similar problem they are currently facing, and your product managed to resolve their issue.
When you are capable of directly pegging the value of your service to the prospective customer’s bottom line, you develop an anchor for measuring the actual cost and ROI for the prospect.
3. Stress on the long term value
When your prospective customer is asking you for a price adjustment, you must understand what they are looking for. Overcome price objections by thinking over these questions:
- Do they have a hard cap on their budget they need you to get under?
- Are they checking off boxes for their boss?
- Are they already sold on your product or service but want to feel as if they won the negotiation?
Keep in mind that the price is what they are paying attention to right now. This price will appear on their budget sheet nearly immediately. The value you offer them will take much longer to appear and define whether a product becomes necessary or not.
Go back and show them the successes your product has achieved. Remind the prospect that you will get them to the desired outcome. Then identify what is driving the request. Once you managed to pull that off, you can refocus on the long-term value.
If you’re struggling to overcome price objections, then consider discussing the long term goals.
4. Be prepared for past discounts
Most prospective customers will investigate if you have given out discounts before to other customers, or if you have offered end-of-period discounts, or if you even had sales. Keep in mind that customers will use your previous discounting offers against you because you obviously have some wiggle room for your price.
Being prepared ahead of time will help a lot to overcome price objections.
If your business has previously engaged in these past behaviors, then you need to be ready to defend your position and risk losing the deal or you need to meet the previous price you offered.
Why, may you ask? Because when you previously discounted, you established the actual value of your price.
It is not totally unreasonable for a customer to want to purchase your product at the lowest possible price regardless of how disgruntled you get or how you attempt to justify the previous discounted offers. The prospect never forced you to previously lower your price.
Lastly, customers are very clever when it comes to these relatively biased deadlines, such as end-of-year special offerings. You may firmly believe that you are incapable of offering that same price two weeks into the new year, the customer will feel disrespected and will intentionally decide to go elsewhere instead of feeling disrespected, unheard, and unappreciated.
Asking questions and understanding your prospect will help you overcome price objections.
5. An alternative to discounts
Ideally, you want your customer to become dependent on your product and the benefit it grants them. Once they have invested enough time to integrate and learn how to use it, chances are they will decide to continue using it.
There is a good chance that your customer is still nervous about the cost of your service. To overcome price objections you need to discover the value of your product by having them use it. Instead of offering them a permanent discount, offer the customer a chance to test out your product to confirm the value it has on their business.
How can you accomplish this? By giving them either a free or discounted trial period.
Give them either a 7-day or 30-day trial to let them use the service long enough to understand its mechanics. If the trial period does not seem to be enough for the prospect to validate how useful your product is, there’s a chance they will request another discount. Consider offering them another 30-day free trial or three-month trial for a 25% discount.
Offering them these free or discounted trial periods for your product allows you to keep your price integrity. You also offer the prospect the chance to become invested in the benefits that your product offers. The customer recognizes that your service has value for what you are charging them but still gains a bonus they were attempting to get from you.
Always try to get creative in order to overcome price objections.
Whether you are selling B2B or B2C, you need to prepare for customers having some prior information on pricing. Your best bet is to prepare to overcome price objections by coming up with ideas that set the value to your product, not price-based.
Of course, you should come up with a plan to overcome price objections. Attempt to shift the conversation away from the hard cost and towards the perceived benefits. This will make it easier for you to overcome price objections.
However, keep in mind that you won’t always be able to sell your product. There are going to be times when you need to walk away from the client. If the client is not ready to pay a price that is determined to be a fair price by the marketplace, then there is no point in wasting your valuable time.
With these tips, you are on your way to overcome price objections with ease!