Tuesday, November 24, 2009

Your Price is too High

When someone says that, don't jump to lower your price. Instead follow this advice from RainToday:

What to Say When a Client Claims Your Price is Too High

Charles H. Green, CEO, Trusted Advisor AssociatesBy Charles H. Green, Contributing Editor

If you're like most professionals, you're not comfortable with selling. It's not easy fighting the feeling that hyping yourself is somehow inappropriate. And it's worse when you have to deal with objections, doing presentations, and getting rejections—or waiting for the phone to ring.

But little can compete for sheer discombobulation with the plain old, "We think your prices are too high." What do you say to that?

Listen to Your Gut

When you hear those words—"your prices are too high"—you probably have one reaction in your mind. "What? How can he possibly think our prices are too high? What is he talking about? We've trimmed them already. I know they're not too high, other firms have got to be that high, and our costs are barely covered here, we're absorbing a lot—how can he say our prices are too high?"

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In other words, you really do not understand what the client means.

Go with that instinct. Ask yourself seriously, objectively, curiously—what exactly do they mean when they say your prices are too high. And stay there for a minute. Do not pass Go, do not jump to "how could they…"

That's because until you know what they mean, you are simply arguing with yourself. You presume to know what the client means and are answering the presumed objections you have invented.

Think there's only one possible meaning? Think again. Let's go through some of those answers you so quickly thought up and explore what questions those answers might be in response to—and not in response to.

  1. Sticker shock. Sometimes, a client simply is not up to date on the cost of what you have proposed (which hopefully bears some resemblance to what they asked for). Maybe they've never bought this service, or haven't bought it lately. In any case, they may feel embarrassed by their ignorance. Not wanting to appear at fault for not being current, they may react with some aggression, masking their defensiveness. "You're just quite a bit too high," they say, hoping to bluster their way out of the difficult situation.
  2. Budget busting. Sometimes a client simply hasn't thought through the combined costs, or the timing of costs, and the total picture ends up being out of sync with the reality of the their budget. In this case, they may not be embarrassed so much as disappointed. But it may be hard to tell the difference from their tone.
  3. Bazaar bargaining. Some clients simply prefer to use the approach of a bazaar, assuming that the buying process is one of negotiation, that the stated price is simply an "opening gambit" in an exciting game. In such a case, the client is neither embarrassed nor disappointed—rather, somewhat excited by the process. But their stern countenance will suggest anything but that.
  4. Sucker punched. If a client pushes back aggressively, suggesting strongly (even literally) that a competitor has deeply undercut you, you may have been sucker punched by a low-balling competitor. It happens. If you're honest, you may admit you've done it once or twice yourself. Therefore, their furrowed brows reflect a genuine belief that you're trying something shady.

Here's the key point. If you try to guess which of those scenarios is operating behind the curtain of your client's eyes, you have maybe one chance in four of getting it right. But if you choose to guess without confirming your guess with the client, you will lose—even if you guess correctly.

Therefore, the worst thing to do is defend against the attack you are imagining in your own head. The best thing to do is exactly what you don't want to do—ask the client simply, "Can you help me understand what you mean by that?"

Asking the "Help Me Understand" Question

You're probably afraid of your mind's version of the client's answer in your head: it probably sounds something like this: "What part of 'too high' didn't you understand, you fool! Like, way high. Like costs too much, out of the realm, not going to win, out of line. Too high! What is it you think you need explained?"

But the clients in our mind are far worse than clients in the real world. When you say, "help me understand," real clients will react one of two ways. Either they'll begin to explain ("Well, we just don't have that kind of budget," "We think you guys always come in high," etc.) or they'll look a bit confused and ask, "Uh, what do you mean?"

In either case, all you have to do is explain that "clients often mean widely varying things when they say the price is too high." Then read off the list above: some find it like sticker shock; some have budget problems; some just figure our opening prices are just that, and some have been presented some really different proposals.

Go on to say, "I don't know if I can help or not. Some of these situations lend themselves to working out, and some don't. In any case, if you'll share with me a little more about what's behind your concern, then we can see if something can be done or not. If so, great. And if not, then at least we'll both know we tried."

The Intent Behind the Conversation

Your words have to work for you; using my words may not do the trick. That means you need to be very clear about the intent behind this conversation.

The intent is to treat price concerns like any other objective piece of information: you explore its meaning and implications with the client until you have a shared understanding. Your time to market is too slow? What do you mean by too slow? Compared to what? What are the implications of being too slow to market? What are the drivers of being slow to market for you?

In that same spirit you want to understand the drivers of price concern for the individual in front of you. The fact that the discussion is about price—and that price is usually an emotional topic—is not a problem; it's a great opportunity. That's because price is an equally uncomfortable topic for most clients (the Bazaar Bargainer an exception).

If you can be the one who turns a difficult statement into a pleasant, curious, customer-focused question, then you are the one who gets credit for transforming the conversation into greater trust.

Your intent, as always, is to develop a deeper relationship with the customer and to do the right thing for that customer. You can never control the outcome of a price conversation, but being curious and honest about it increases the odds and pays relationship dividends in future.

Charles H. Green is a Contributing Editor of RainToday, and a speaker and executive educator on trust-based relationships and trust-based selling in complex businesses. He authored Trust-Based Selling and co-authored The Trusted Advisor. He also leads Trusted Advisor Associates. You can reach Charles at cgreen@trustedadvisor.com.

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