“Your price is too high.”
The dreaded reply that can trip up even the most seasoned salesperson and cause them to lose the sale—or worse yet—sacrifice margin.
Sales always has been and always will be a function of margin. That’s why it’s so crucial for your salespeople to be able to handle price objections effectively and sell on value every time.
Give your salespeople this 5 step formula for handling price objections and they’ll be able to avoid a price war, maintain healthy margins, and build value in your buyers’ eyes.
Step 1. Mindset: Expect the Price Objection
Price objections are a fact of sales life, so your salespeople must anticipate that a buyer will often have an initial objection to the price they give. Your reps can better hold their ground and avoid being thrown into a price war by being prepared for the pushback.
A prospect will only state that the “price is too high” if they believe they can get the product at a lower price from someone else, or if they think your salesperson will fold under pressure. To combat both of those vulnerabilities, your salesperson will need to focus on building value, and being confident in themselves and their product or service.
Step 2. Know Your Terrain
A competitive marketplace requires your salespeople to be experts in not only your company and offerings, but in your competitors’ company and offerings as well. Make sure that your reps have a deep understanding of your toughest competitors—what their strengths and weaknesses are, their value proposition, etc.
Maybe your biggest competitor offers a lower price, but consistently falls short on delivery. Spotting those holes allows your salespeople to better defend their price and demonstrate the value that really comes with partnering with your company.
Step 3. Get Clear on Margin
In the moment it may feel harmless or even advantageous to discount a product or service to make the sale. But it’s important to remind your salespeople that offering or accepting a discount—even a small one—could have a devastating impact on your profits.
Successful salespeople understand the importance of margin and don’t discount to win business.
Why? Because when a salesperson discounts their product or service, it ultimately sends a message to the prospect that the salesperson isn’t 100% behind what they’re selling—immediately diminishing value and credibility.
Step 4. Own Your Differentiator
The last thing you want your prospect to do is commoditize your product or service. If they believe they can get what you’re salesperson is offering down the road for less, what’s stopping them?
To avoid that commoditization, your sales reps must be able to clearly communicate what makes your product or service different. A powerful differentiator will set your offering so far apart from the rest of the competition that it will no longer be relevant to compare them side by side.
Remind your salespeople that they can be the differentiator, by using a consultative selling strategy and positioning themselves as strategic advisors.
Step 5. Be Willing to Walk
One of the hardest lessons learned in sales is that not all business is good business.
Your salespeople must be willing to walk—even when prospects are sparse. In the end, buyers that continually price cut and commoditize your offerings aren’t the type of buyers you want to partner with.
There’s nothing more powerful for building value than having the confidence to walk away from a deal that isn’t the right fit. By practicing that attitude, your salespeople will learn to stand their ground and create value that prospects won’t want to miss out on.
The truth is, the reply “your price is too high” will always be something your salespeople have to face (and there will always be a competitor willing to cut their prices lower than yours). They key is having a plan in place to handle price objections in a way that builds value and gives your salespeople the upper hand every time.
Make sure your team has that plan ready and perfected the next time they hear, “your price is too high.”
The Brook’s Group’s How to Sell Against Lower Priced Competition Workshop gives your salespeople the strategies and tactics for handling price objections, and is a great option for your annual sales meeting. Learn More.