4 steps to overcoming price objections and close the deal

The sales appointment was going so well. We had uncovered a real need, I had demonstrated how our solution had solved that problem for other business owners, the prospect acknowledged that there would be value in our solution. We’re headed toward a sale! Then I heard those dreaded words, “I’d really like to work with you, but I just can’t afford to do it right now.”

overcoming price objections“I can’t afford to”, I hate that response. What does it really mean? Does it mean they don’t have the money? Does it mean they don’t find value in what I’m proposing? Does it mean they don’t want to work with me and are trying to let me down easy?

So inside my head I was saying, “What do you mean you can’t afford it?!? I can see 3X that amount that we can make in our first couple of months working together. In fact if you don’t do something I’m not sure how you are going to afford to pay yourself by year’s end. Are you bonkers?!?!”

Here’s 4 steps to overcoming price objections from prospects to help you close the deal:

1. Understand the price objection

Knowing I had done all the hard work of uncovering the need and building up my credibility as a solution I can’t just give up. It’s worth one last shot to try to figure out what they really meant. I replied, “I understand, could I ask you a few questions about that? Is there an amount that you could commit to? I know you want to overcome the issues we discussed. What would it be worth to you if we could solve those issues?”

At this point the discussion can go one of three ways:

  • “No, there’s no amount I can commit to.” Either the prospect is broke, or they don’t value what you do. Either way it’s time to say good-bye.
  • “Sure, I could commit to $X.” Now we are in a negotiation. They’ve agreed that there is value, just not as much value as you were asking for.
  • “I can see how solving those issues are worth every penny you are asking for, I just don’t have the money right now.” This is the most rare, and it really is a money problem! Could we help them to find the savings to pay for it, could we help them to find financing, or do we need to wait until their finances improve?

When the prospect wants to negotiate price that’s actually a good sign. It means that they want to work with you — it’s just a matter of what they are willing to pay for.

When trying to close a deal, only lower your prices as a LAST resort. There are always other options! (Click to tweet)

When you just lower your price you lose some respect from your prospect, and you are likely to end up resenting them (you are working hard for them, but for less money than your other clients). If the prospect can start the relationship by devaluing your work, how are they going to treat your work as the engagement progresses? The clients that work you down on price at the beginning are the ones who nit-pick your work, and second-guess your advice and then only pay half your bills in the end. No thanks.

2. Counter the the offer

To overcome price objections but not devalue what I’m offering, I want to lower the value that I’m offering to meet the price they are willing to pay. What can you take out of your offering that would lower the value, but still give them some help?

“So instead of our Gold package that we have been talking about, I could offer you our Silver package — it’s actually a little less than what you are willing to spend. Let me tell you about the differences…”

3. Reiterate your value

Some prospects won’t go for that — they want the “Gold” package for the “Silver” price. (Or maybe they need the Gold package to solve their problems.) You might have to walk away from this one — but there’s one more tack you can take. “I understand, I can’t do that. One more question before I go — you’ve acknowledged that there are some real problems here, that if not resolved, could threaten the health of your business. If we don’t work together, what’s your “Plan B”? How are you planning to resolve these issues without my help?”

This price objection technique forces them to examine the cost of not working with you. It gets them to talk about any alternatives that they might be considering so that you can point out any differences between what you offer and what they offer. If they don’t have a Plan B I will often throw in, “I just don’t want to come back here 6 months from now and see that these issues have gotten worse and there’s even less money to pay for any potential solution.”

When you hear, “I can’t afford it.” You don’t have to give up — there are still some arrows in your quiver that might bring home the contract.

4. Close one more time

After you go through all the above steps, try to close the deal one last time.

To recap, let’s go over the sales process again:

  1. Find out what the prospect means by their price objection
  2. Counter it as best you can (offer something cheaper, or demonstrate more value)
  3. Reiterate the value of your solution and the peril that they are in
  4. Close one more time.

But it doesn’t end there!

If you still didn’t get the deal, think about this while you are headed back to the office; “What could I have done during the qualification stage that would have saved me from spending time on this prospect?”

What’s help you the most overcoming price objections? When prospects say you’re too high, how do you close the deal?








Photo credit: Ryan McGuire

Comments

  1. marksylvester says:

    Great article Brad. I see that you are in Chicago helping entrepreneurs. I am doing something similar in Santa Barbara and just posted this article to our site. Curious if you know Seth Kravitz. Met him at TEDxMidwest. We run the network that drives that event.

    Our 805connect project is to support entrepreneurs, startups, incubators, small business and educational efforts in the Central Coast of California (videos of the project here: https://www.youtube.com/playlist?list=PLghfrxFC9cUJFGsVBtNIsEugxYVTzVCVI)

    Your article is spot on. Thanks for writing it.

  2. Terry Pierce says:

    Brad ~ Thank you for the article, it’s quite helpful. I am not a natural salesperson and struggle with this scenario often. Will be trying these techniques out over the coming weeks!

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