Don’t let the pricing conversation derail your sale. You can justify your price with 3 simple strategies; use budget and price as part of your lead quaification, quantify the value of your features, and uncover the real issue behind their pricing concerns.
Are you avoiding a price increase because you don’t think you can justify your price to customers? Or maybe your prices are considered to be higher than your competition and lowering them is simply not an options.
Know this. A 1% price increase has a bigger impact on profits than selling more products. In his book 1% Windfall, pricing expert, Rafi Mohammed shares how raising prices by 1% can increase your profits by 11%!
In this article, I’m going to share some of the best price increase tips and ways to justify your higher price to customers.
Make “Price” Part of the Lead Qualification Conversation
Why even wait to justify price? The best way to overcome a pricing objection is to not make it an objection. Bring it up right away!
For some reason, many people save the budget or money conversation until last. Maybe this is because you’re afraid to get a “no” right away. Let’s face it, if they don’t want to pay the price or can’t afford what you’re selling, they are NOT a real prospect.
Save yourself and your prospect a lot of time and misunderstanding and have the pricing conversation as part of the lead qualification step. You won’t have to justify price if you make the customer talk about it first.
Questions to ask to justify price:
- “Do you have a budget for this purchase?”
- “How much were you looking to spend on this?”
- “Do you have a limit on how much you want to spend?”
There is a good chance that they might say something like “Well, why don’t you give me a proposal.” or “That’s why I’m talking to you, I want to get an idea for how much this will be.”
Don’t fall for it. Instead, weave the conversation back to helping them disclose how much they intend to spend on this. If your prospect continues to waffle, they are most likely not ready to buy and not a qualified prospect.
Another option is to say something like “Most of our clients end up spending between X and Y. Is this a range you’re comfortable with?” You should quickly be able to see if they are a qualified prospect.
If they are still unsure, you can try some of these tips.
Link Unique Features to Show Value and Justify Price
I ran across this Facebook ad for a video marketing tool. It’s a perfect example of acknowledging your price is higher than your competitors.
First, you meet the owner of the company. No one is more qualified to talk about the unique features of your product or service than you are. In this example, you can see the confidence and excitement about the tool.
The best way to justify price is to link your features to customer benefits is to identify the top five to seven frustrations your customers normally have around your product or service.
With that list in hand, you can make an estimate on what your average customer’s hour is worth and then simply do the math.
An even better way to get at this information is to have this conversation with your customer. You can ask “Tell me how you normally do this task.” and have them go through each step and talk about how long it takes to do each step. If your customer has an employee going through this process, you can ask them to estimate the hourly cost of that employee.
Find the Real Objection
I always like to say “If your customers are complaining about price, they have no idea why they should choose you.”
If your prospect is still “stuck” on a lower price, they just don’t see the value. There is something underneath what they are saying that really matters to them, and you need to find out what it is.
No need to be sneaky, just ask. “I get the impression that there is something that’s really important to you that I’m not addressing, can you tell me a little about what you’re looking for?”
Try the Take-Away
Let’s say the prospect loves your product or service and simply doesn’t have the money. Instead of negotiating for a lower price, take a feature away.
In your conversations, your prospect is bound to value some things more than others. what can you take away that will lower the price and meet your customer’s needs.
But beware — you have to know exactly what each feature costs before you go taking features away.
Here’s a true story.
I do in-depth customer interviews for customers. You might think that doing fewer interviews is one way to reduce the price. But NO. You see, I realized (too late) that the real cost driver was actually reaching a customer with whom to have the conversation and NOT the number of interviews.
To solve this problem, I simply price by completed interview and give them a minimum quantity.
Don’t Justify Price — Embrace the Conversation
If there’s anything I’d like to share in this article, it’s to embrace the pricing conversation. Price is almost always the elephant in the room and when you dive in and be the first to bring up the price, you’ll find your prospects will appreciate it.