Price Resistance When Selling

Does not mean your customer is “bottom line driven”

Within the first 24 hours of anyone’s sales career, they run into the oldest and most common objection: Price.  It happens right away and it continues through your entire sales career. 

Every salesperson can improve how they act, react, and think about price objections. 

• The first step is to get it right in your head
  • Realize that price objections are going to happen no matter what you sell, what your product is, or even what your price is!  There is a natural human tendency to save our resources, especially scarce resources.  And money is one of our most important resources.
  • With this understanding, you can relax when someone challenges you on your price.  You now have somewhere to begin.  My first set of questions on price objections are all about, “Too high compared to what?”  If I’m too high, then what do you think is right?  If I’m too high, are you comparing me to a competitor, the ROI of spending money with me, or maybe doing it themselves? 
  • One of the biggest competitors is the silent competitor known as “Nothing”.  Many of us in sales get beaten by this competitor and never know it.  Customers have the option of not doing anything at all.  They don’t have to use your biological, your nutrition supplement, or my sales training.  They can simply continue farming, feeding, and selling without buying anything we sell.  Sad, but true.  Poorer results (maybe), but true.  When I was selling horse feed, far more horses were fed nothing.  Most were on pasture, hay, and a mineral block.  We focused on competition from other feed companies, but they were less competition than “nothing”. 

• The next step is to understand what’s in your customer’s head

Most salespeople have been trained to sell “Value” versus selling on price.  They are also told, “It’s never about price!”  These are ok advice concepts, but not good enough to help someone actually sell.  The key is how to use those concepts when selling and who they apply to.  You hear these concepts in sales training or from your manager, and then, every customer you call on seems to mention that you are higher in price than your competition, your value is not that distinctive to them, and they are “happy where they are buying from”.

First, understand that it’s always about price.  The three parts of value are Time, Money, and Emotion.  Ignore money at your own peril.  As a vendor, we either save our customers time, save/make them money, or increase good emotions – decrease bad emotions.  All three are balanced in the customer’s mind.  I repeat, “the customer’s mind”.  Your opinions on these three values are of little concern to the customer. 

Every customer has a relationship with these three values.  And they value them differently.  I change my own oil and have multiple DIY home repair projects going on at all times.  Why?  Could I find someone else to do those tasks?  Sure.  Could I afford it?  Sure.  Then why would I do them?  That’s a great question.  That’s the first question any lawn care salesperson or home repair salesperson should ask me.  Yet, they never do.  They knock on my door and tell me all about how great their service is.  And never ask me why I do it myself.  They may mention they will save me time, but I have time.  So, the sales conversation stops right there.

If they dug in, they’d discover that since I was little, my family did all those tasks themselves, as most families did back then.  So, I know how to do those tasks and find it hard to pay someone to do something I know how to do.  Maybe I even think I can do it better or “the right way”.  Wouldn’t that be such a different sales conversation if I discussed with the lawn care salesperson what I thought “the right way” to mow my lawn is?  It would last longer and be more meaningful.

When you run into price resistance, and even before you run into it, consider how you are going to get into the mind of your customer.  How will you uncover their view of time, money, and emotional value to them?  Seek to understand their relationship with time, money, and certain emotions before you expound on your product’s value.

• The third step is to match up steps one and two for your customer.

There are a lot of ways to do this, but I only want to share this one.

Put the value that is most important to them into terms they will understand

We certainly need to quote our products or services in terms of the unit or total cost.  We quote rates by the hour, the acre, per pound, per bushel, per ton, etc.  Every day, we drive by hundreds of gas stations that quote us by the gallon.  We can price shop all day long.  If the gas stations are across the street from each other, then maybe it is good to buy on price.  However, what if you have one of those Apps like Gas Buddy that tells you gas prices in the area?  Now you can see what prices are in a much bigger geography.  You might be able to save, but you risk running out of gas.  You risk losing a lot of time if you run out of gas.  Maybe you miss an appointment or a family event, or stress out those riding in your car because you are going to save 2 cents a gallon.  You explain to them how expensive gas is these days and how you want to save by using this new App.  Then, one of your kids explains that the net savings on 16 gallons was a whopping 32 cents. 

What about your customers?  What can you put in their terms that they understand?  In grain marketing, this occurs every day with many farm customers.  They will argue with the grain elevator merchant over one or two cents per bushel on the basis price, but lose 20-30 cents on the board.  Do your own math, but this equates to losing one out of every thirteen rows of corn.  If they produce 100,000 bushels, they are risking 7500 bushels arguing over 500 bushels.  That’s seven semis of corn.

When you put the value into a bigger or smaller picture view, it can shrink or inflate the time and money values.  This is done to give them a different perspective on their decision-making process.  This shows them what they are risking to save or make money.  If their DIY project goes bad, how much of their crop will they lose?  More importantly, what will be the impact of those losses? 

Last note on this:  Sometimes, you have to let customers learn their lesson and hopefully come back to you.  Let them buy the cheaper product or service.  Let them do it themselves.  Let them shingle their own roof and learn the hard way that water will leak in if they do it wrong. 

That’s why you never quit on a customer or prospect.  They may tell you one day that you are too high.  However, if you are worth it, they can always realize it at some point and come back. 

Very final note if this happens:  Don’t gloat that you were right.  You knew you were right, and now they know it as well.  Remain quietly confident and welcome them back as a customer.