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This Week's Tip: 
Dealing With Price Objections

Greetings!
One of the most common questions I hear is how to deal
with price objections. This week I've invited good friend
and sales expert (especially as it relates to price), Bill Lee
to share his experience on this topic.

Dealing With Price Objections
By Bill Lee

Do you tend to cave in when an aggressive customer
questions your prices?

Do your margins or commissions take a hit because you
stink at defending your prices?

Is your proposal-to-order ratio pitiful in part because you
lack confidence in the overall value your company has to
offer compared to your competitors?

If you answered yes to even one of the above questions,
I have tips to benefit both your company's managers and
salespeople.

Who's to Blame?
Why do customers complain so much about price? One
reason is because in many industries, salespeople have
taught their customers that if they kick scream loudly
enough and long enough the salesperson will somehow
come up with a lower price. If this is the case in your
company, something must be done to reverse this trend.

So I believe the first step is to accept a lot of personal
responsibility for so much of the haggling that goes on
over price and take action to fix the problem.

Confidence
One of the best rules I've ever found to give salespeople
confidence in their pricing is this: “If your customers
and prospects are not complaining about your prices,
then your prices are too low." Just because customers
ask for lower prices doesn't mean that your prices are
high, it just means that the customer wants a lower price.

Don't we all?

In the free enterprise system that we operate in on a
daily basis, prices are largely determined by two factors:

1.) Supply and demand.

2.) Negotiating skills, both on the part of the customer
and the salesperson.

Take a look at your company's sales! I don't care
whether you're doing $5 million in sales or $100 million
in sales, your prices are obviously competitive. If they
weren't competitive, you would not be doing the volume
of business you are currently generating. Your customers
have made the decision that when they consider your
service level, the quality of the products you have to
offer and the price you charge of them, your prices
reflect a satisfactory value. If your prices were
perceived to be higher than the value you offer,
your existing customers would do business with
one of your competitors.

This fact alone should give you confidence in
the competitiveness of your prices.

Set-Aside Technique
Here's a question designed to determine if price is
the “real reason" the prospect is not doing business
with a salesperson or is the price objection merely
an excuse:

“Mr. Prospect, IF our prices were item for item
identical to our competitor's, are you telling me that
you would give me your business?"

If the prospect answers, “Yes," then you have
successfully determined that price is the only
obstacle that must be overcome.

However, if the prospect answers with something
like, “Well, actually, no, even if your prices were
identical to the prices we're currently paying,
I don't believe we would give you our business?"

This is why we call this question the set-aside
technique. The question is designed to set aside
the price objection; that is, treat it as if it doesn't
exist. So if the prospect tells you that regardless
of whether your prices are competitive, you still
would not receive an order, you must then ask a
follow up question:

“If price is not the obstacle that is standing
between us doing business together, I know
you have another reason, would you be kind
enough to tell me what IT is?"

Again, the salesperson is probing for the “real
reason." By the way the prospect answered
the Set-Aside question, the salesperson learned
that the price objection was nothing more
than an excuse.

The key word in the Set-Aside Technique is IF.

When you use the word IF at the beginning of a
question, it becomes a conditional phrase.

Here's another example that concerns service
as opposed to price: The prospect tells you that
your company has a bad reputation for on-time
delivery and this is the reason he won't do
business with you or your company.

You might ask the customer:

“Are you telling me, Mr. Prospect, that IF we
could guarantee you that your order would be
delivered by the time you specify, you would
give us an initial order?"

If the prospect answers yes, then you know that the
service obstacle is the “real reason." But if the
prospect answers no, you know that while on-time
delivery may be a concern, it is not the “real reason"
or the only reason you are not getting a shot at this
prospect's business.

Negotiating Rule
Never, ever, give up anything unless you at least
attempt to get something in return.

“Mr. Prospect, IF I could persuade my company to
lower our price, could you see your way clear to
also give us an order for the __________?"

The point is never give up anything without
asking for something in return.

Pricing Authority
If companies are going to give their salespeople
pricing authority, it is imperative that they also
spend a few dollars to train them in the techniques
to deal with pricing objections. Over the course
of a 12-month period, this training investment
can many times make hundreds of thousands of
dollars of difference in your company's gross
profit.

If you're on your own, and your commission
depends on the margin you sell at, the same thing
applies. You must be able to handle price questions.

Follow these tips and you'll find price to be
less of an issue as you sell more, at higher margins.

(Bill Lee, CSP, is an expert in both sales and how to deal
with pricing objections.  To subscribe to Bill's FREE weekly
electronic newsletters, go to www.BillLeeOnLine.com)

QUOTE OF THE WEEK
"Don't be afraid to take a big step when one is indicated.
You can't cross a chasm in two small steps."
David Lloyd George



Go and have your best week ever!

Art