Don’t let price objections bring your sales proposal to a grinding halt.
Contractors, like parents, can be undone if they constantly cave in to whining. If parents give in every time a child begs for candy, mom and dad will pay for it in dental bills. A contractor who gives in every time a potential customer complains about price eventually pays for it with diminished profit margins. Saying yes is easier in the moment, but in the long run it leads to decay.
You can employ several tactics to avoid caving in when a potential customer protests that your price is too high and still win the contract. Some require you to look at your long game and overall pricing strategy. Others are simple strategies you can try in the middle of your pitch to try and get the potential customer to shift his or her thinking about price.
1. Know exactly what the customer is objecting to. Sometimes people abruptly cut off a sales pitch early by announcing that the price is simply too high. But if someone has been interested enough to listen to an entire proposal and an objection to the price is only thrown out at the end, you need to determine what the customer means when he or she says your price is too high.
It could mean that the price you are quoting is literally higher than they can afford right now. Financing or an alternate payment structure could be proposed as a solution.
If the customer believes that the same service is available for less from a different provider, try to determine if they are comparing apples to apples. Point out the advantages of your proposal.
Calling out your proposed price as too high could also mean that the service you are offering is not worth the price to them. The customer may say your price is too high but what they mean is that it’s not too high for what it is, but for what they need. Start over and this time listen to the customer, then present an accurate price for what is truly needed, rather than what you’d like to sell them.
2. Get out the calculator. Don’t spend a lot of time discussing the total price. Rather than focus on the price of a six-month contract, break it down by the month, week and day to show the cost is reasonable. Explain how the daily cost may be less than the price of a fast-food meal or a good cup of coffee, and ask if it isn’t worth that small amount to have the job done correctly. Take the price they had in mind or said they could afford and stress the small difference between your price and theirs.
3. Show your hand. It’s hard to determine the true price of anything these days. Most retailers offer merchandise at 25 percent off so frequently customers start to wonder if anyone ever pays regular price for anything anymore. So it’s no wonder a customer’s gut reaction is to feel ripped off when you give them a number. Explain how you arrived at the price. Have a pricing structure in black and white that you can show the customer and make it a company policy that the price is the price. Show the customer how difficult it was to get the number as low as you did. Explain how long your rates have been in effect even though costs have gone up. Seeing how slim your margins are might make them feel camaraderie with you. If the price is the price for every customer, they’ll know what their competitors are paying and may be less likely to balk. Most people just want to feel like they are being treated fairly.
4. Don’t take it personally. It’s easy to become defensive when a customer rejects the price you’ve quoted. But don’t feel like they are questioning your integrity or your intelligence. They are just doing what today’s “buyer beware” culture has conditioned them to do. They are looking to protect their business interests just like you are. So try to put yourself in their place and reiterate the benefits of what you are proposing. Price objection is your invitation to further educate a customer about the quality of your products and services.
5. Act like you’ve already closed the deal. Even if the customer hasn’t signed on the dotted line, talk to them like they have. Say, “When we arrive at your location” or “We’ll be working this long at your site.” The customer is less likely to say the price is too high if it seems like you’ve already struck a deal.
In the end, value is the crucial selling point when dealing with a customer who rebukes your price.
Investor Warren Buffett famously said, “Price is what you pay, value is what you get.” The key to winning over a cost-conscious customer is getting him or her to appreciate the value of the service you offer, while accepting the price as fair.