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"The rent is too damn high." Jimmy McMillan
Pricing is a strange beast. While sellers know that a project's success is due to more factors than just money (factors like personnel and timing) it's only money objections that makes their brains freeze.
To deal with this tendency to lock-up at buyer push-back on price, it helps to know that there are two types of pricing discussions (ballparking and best-price, covered in a previous note) and to see best-price pricing objections as falling into one of two buckets. One bucket we can label "logistics," and the other we can label "value." After debriefing hundreds of professional sellers over time, I'm convinced the latter bucket causes the most panic.
Logistic pricing objections are imposed by the organization. "I can't pay that price," says the buyer. "Why not," we ask. "Well, because I only have $10,000 in my budget" is a logistics answer. You don't need to fight a value battle there, you just need to work through the logistics because their price objection is coming from the details of how the company operates.
Value pricing objections, on the other hand, are more difficult to deal with. "I can't pay that price," says the buyer and when we ask why not, they give one of three answers.
- They don't believe you can deliver the outcome.
- They don't think the outcome is a high priority.
- They think they can get the same outcome from another vendor, for less.
- Or, most common in my business, they think they can get the same outcome with internal resources.
Those types of value judgements are hard to stomach, but they're real, right? If they don't believe we can deliver, we need to address that. If they don't think it's a high enough priority, we need to find out what the priorities are. And if they think they can get the same outcomes internally or for less, we need to check their thinking.
The value bucket price objection is hard on our ego because it means we haven't done enough to justify our cost. It's our worst fear because it means we didn't do our job. I get it.
My advice is this: before you start the self-flagellation and scramble to overcome a value objection, take a minute to double check where the price objection is coming from.
Sitting in on a recent phone call, I listen as the rep does a great job of re-building the buyer's enthusiasm for the objectives and masterfully summarizes the options for purchase. Tensions are high during the pause after she asks for the business. Tick, tick, tick, goes the clock when the buyer speaks up and asks for a price concession on the lowest price option. The salesperson freezes. I can see her mentally search for the right words and hear her start to re-sell the value of the solution. My job is to listen and observe, but I can't resist and scribble out "How did they come up with that price?" on her notepad. She freezes for a second, then asks where the buyer's suggested price came from.
The buyer says, "It's what I is allowed to spend without getting a sign off." A logistics question.
The rep needs to stop trying to build value and get to work re-designing the payment for services.
Check the source of the objection. It yields surprising results.
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