Most business owners have experienced that moment when you reveal the price and your prospect says, “That’s a bit more than I was expecting. Sorry, but it’s beyond my budget.”
The question then is, how do you respond? One option, of course, is just to walk away. You may not be prepared to take on the business for less than your original price, and that’s fine. It’s often a good thing to do. But let’s imagine that you particularly want to win this piece of work. What do you do then?
The first step is to establish if they have any other objections and then say “So if we can agree a price you’d be happy to proceed?”
Now you can work on the price objection.
What you should never do is automatically give a discount. In fact giving a discount is the last thing you should do. Here are five tactics you can use instead:
- Use two really powerful words
Nigel Botterill from the Entrepreneurs Circle taught me this. When a prospect says “It’s beyond my budget”, ask what their budget is. When they tell you, say “Up to…” Immediately you have re-framed their objection and suggested that there may be a higher price they are prepared to pay.
- Review the value
If a prospect thinks a service you’re offering is too expensive, it’s not because the price is too high but because they don’t fully understand its value. So go back and talk about the benefits again. Remind them of the end result, of the difference it will make to their business (or life). You might find that’s enough to make them go ahead. If not, move on to tactic three.
- Suggest another option
If you’ve read any of my previous blogs you’ll have heard me talk about the magic of three – how any service you provide should always offer prospects three pricing options. So, if you’ve been telling a prospect about your gold level and it’s too expensive, reveal your silver. If that’s too expensive, reveal your bronze. If even that’s too expensive, you’ll need to try the next tactic.
- Change the contents of the offer
Although you should always start with three options, the more a prospect can tailor these to their own circumstances, the easier it’ll be to end up with a price they’re happy with. A great way of doing this is by asking them to choose the most important elements of the service you are offering and leave out others. If, for example, all three of your options include unlimited support, you could offer the option of changing this to just one support call a month and reduce the price accordingly.
- Offer rewards
This may sound counter-intuitive but we’ve used it very successfully in the past. If all the previous tactics fail, then a final option is to offer a discount – but only if the prospect does something for you in return. Asking for referrals is a great example. You can say something along the lines of, “We don’t normally offer discounts but, if you’re willing to refer us to three other business owners, then we can cut back on our marketing budget and pass the savings on to you. So would you be happy to do that?” If they say yes – which nine times out of ten they will – then give them an appropriate discount. Another example could be asking them to do more of the preparatory work for you that makes your life easier. If they agree, again, you can swap this for a discount.
An objection around price should be the start of the next conversation, never the end of the sale. Using one, or a combination, of these tactics will deliver a higher conversion rate of the leads coming into your business.
PS I mentioned recently that my latest book ‘How to Build a Successful Business’ was published this month; if you’d like a copy drop me an email either with your address and I’ll pop one in the post or if you prefer I’ll send you a digital copy.