I was with a client the other day and they mentioned a conversation they recently had with a prospect.
After a warm referral they made the initial phone contact, and a few minutes into the call the prospect asked the dreaded question “Can you give me a price? My current provider charges $$$ what can you do it for?”
This left the client stuck, as the price mentioned was his standard hourly rate he paid his staff and so was not even in the running.
Don’t worry though; we all get tripped up from time to time when it comes to these types of questions around price.
Here are some ideas to help you negotiate your way around that nasty elephant in the room we call ‘price’.
First off, don’t ask about their budget. This is one of the biggest no nos in sales. If you do this, you have already created a ceiling. If you come in higher than the price they expect to pay for your offering, you will have a battle on your hands to get them to come round to your price point.
However, if they ask about price early on, you can reply by simply saying “I need to know more about your needs before I can give you a price. All our solutions are customised to the client” – you can’t prescribe until you have done a full diagnosis.
Watch out for benefit buckshot, as this can kill you in a sales interview. Benefit buckshot is when you reel off the benefits of using your product or service in quick succession. It’s kind of like shooting a shotgun in the air and hoping a duck is flying past. More often than not the client then says “well we are already getting that from our current supplier, how much discount can you give me if we don’t include that in the price”. Be wary of this and remember – It’s only a benefit if the prospect tells you it’s a benefit.
Another key thing to remember is not to sell on the phone. If you have been referred to a prospect, the only outcome you want from that first initial phone call is an appointment to meet in person. Otherwise you may find yourself having to justify yourself or sell on the phone. Questions like “what can you do for me” and “what makes you different from my current supplier” are killer and best avoided or handled in person.
When you start to negotiate on price, or even justify why you charge a certain amount, you are arguing with the prospect. The key to getting around this is showing the return on investment that your prospect will receive if they go with you. This may mean they save money or make money. Either way, by showing a strong return on investment, you will avoid having to stand up for your pricing, or debate about your price points.
Ok, so if you really have to drop your price, then for goodness sake change your deliverables!! If they insist on paying less, then perhaps they pay more up front, or you may suggest a staged delivery. But remember, if you are crafting the perfect solution for your client; beware about cutting corners here and there in order to make it more appealing financially. If you change the price you must change the conditions!