Why Prospects Challenge Your Pricing Proposition

Your prospects & clients want several things from you, as their supplier.  They look for fair price, quality products & services, and timely service (though not necessarily in this order).  Surveys suggest most consumers want timely and responsive service as a first priority, quality products & services, second, and low prices, third.

Surveys of sales groups over a 20 year period, asking what they thought was most important to consumers, on the other hand have revealed a different, yet consistent perception…low price comes first, quality next and service last.

There’s clearly a difference in perceptions and expectations between the two groups, which is interesting.

Three elements need to be understood in selling situations if you’re going to effectively deal with the challenge of price.

• First is price, which is what we, as consumers, pay for what we buy.  
• Second is cost,  which is what it costs us over time, what it costs us if we do it wrong, do it late, or not at all.  
• Third is perceived value.  That’s the value we expect for the money we pay.

Most consumers tell salespeople they want low price…when what they really want is low cost.  It’s natural to want to take issue with this statement, but consider what you, as a consumer want.  Do you want the cheapest, or do you want the product or service that best solves your problem, answers your need, or fulfills your desire?

The truth is, most prospects or clients want their problems solved.  They recognise they get what they pay for.  They also know that the distaste of poor quality lasts far longer than the sweetness of the tantalisingly low price.

Buyers will object to price when they feel what they’re being asked to pay is higher than the value they perceive in the transaction.  When an ineffective salesperson encounters price resistance, they usually lower the price.

Unfortunately it’s not usually a price or cost issue at all, rather one of the perceived value being too low. What can you do to raise your prospects/clients notion of the relative value of what you’re selling?

A simple way is to find out what is troubling them most, and then show them how your product or service will satisfy, or overcome this need, want, or obstacle…or, even better, exceed their expectations of value.  This way, price will become secondary.  Not cost, but price.

Real sales pros focus on value…that is, what the product or service does for the customer…and not the price they’ll pay.  They understand that while price is an issue, it’s usually not the most important one.  Price will always seem high when perceived value is low.

The way to change the relationship between price and value in the purchaser’s mind is to focus on raising the value perception.  Lowering price only makes them view your original price, as well as the new, lower one with suspicion.

It’ll become evident that you don’t want to introduce price too early in the sales process…especially not before you've had the opportunity to build a value proposition in the mind of your prospect.  If you have a buyer who’s a price-only shopper (they are out there, aren't they), you’ll need to decide what their business will be worth to you in the long run, or if it will ever be worth anything.

History has shown that prospects who make a big deal out of price, expecting price adjustments…will ultimately require a lot of other concessions, extras, etc., as well.  Use their attitude about price and cost as a barometer of the overall quality of the relationship with you and your products in general.

This isn't to say you should never lower price…only that you should never make your first reaction to price resistance a lower price.

Remember!  Once you've set a pricing precedent with a client, you’ll live with it for the life of that relationship …and, of course, anyone they might refer you to.

Now that's worth thinking about

If you'd ;like to know how to increase the value, focus on the value add in your business attend the Business Growth Program, where we'll challenge you to think differently about how you do business.

Alternately feel free to give us a call on 01626 906348 or email stevegaskell@actioncoach.com