Sunday, July 25, 2010

Your Price Is Too High!

image This article was written by Barry McKinley, SCORE Orange County Management Counselor

When you hear that statement from a potential client the next thing that you say may develop a new customer or chase them away forever. The best trained salespeople expect this question every time they make a presentation and are armed with intelligent responses. Clients who make a purchase have 58% more objections then non-buyers.

To prepare yourself for the Price Shopper, make a list of 10 reasons to buy your product or service. Give specific reasons, regarding your quality, specific performance, customer service, warranties, client testimonials and pricing policies. Be prepared to discuss these with your client explaining how your product or service’s features will benefit them.

  • Each time you present your product or service listen closely to your clients’ objections, learn from what they are saying and be sure to address and overcome those concerns in future presentations. The most common price objections are
          • Your price is too high
          • I can buy it for less at ……
          • Is this your best price?

What does the price objection tell you?

  • The client is a buyer
  • You have not presented your features properly
  • The client doesn’t understand the products/service benefits
  • You have a great chance to make a sale

Consider some of the following strategies you can use to overcome the price shopper. Refocus the client on the value rather than price alone. Put it in terms they can understand, “For only pennies a day more you can be enjoying the top of the line!” Get the client involved in determining the benefits they most desire and then emphasize those benefits.

Remind your client that price is only one way to measure value. In my last business, clients would complain that my hourly rate was 40% higher than my closest competitor. I would point out that my competitor was not “factory trained,” did not receive product updates or training, did not carry proper product insurance to protect the client, and most importantly because of their lack of training it took them twice as long to do the same job and the outcome was not as safe. I emphasized to the clients they would pay more in the long run and get less protection and warranty support. I would remind the clients for them to make an accurate price comparison the other company’s pricing had to be 75% less than mine (which I knew was not possible for them to attain and still support overhead). I also pointed out that the competitor still didn’t protect them on warranty claims or recalls. The final question I would ask them is “Why would you want to risk your safety and resell value and still pay more money?”

The most effective sales tool you have in your bag is probing! Without asking questions regarding pricing and the customer’s needs you are ‘shooting in the dark’. Many salespeople immediately drop their price when asked by the consumer. Not only does this hurt your profit margin but you also lose credibility with the customer. You have sent them the message that you were willing to overcharge or worst of all take advantage of them. If you are forced to give a price reduction get something in return! For example, tell your client “I will be glad to give you a price reduction on this second item when you purchase the first item”. Or offer a credit towards future business.

If you must cut your price, be sure to do the following

  • Verity the competitor’s price
  • Know what services, that are included in the price
  • Know your cost on the product or service
  • Know what your profit margin is and needs to be
  • Know what alternatives to suggest.

In thirty plus years of selling I have found the most effective response to “Price Is Too High! Is “COMPARED TO WHAT?”