How to overcome price objections

[One Tough Pressure 580]

How to overcome price objections

By Howard Partridge

All of us have experienced price objections in the past, but what are the best ways to overcome them?

The absolute best way to overcome price objections is to do it before an objection is raised. Our company (Phenomenal Products, Inc.) is known as the highest priced company in our area.

We have intentionally positioned ourselves that way, so people know we are the highest before they ever call. Many companies attract price shoppers because their message says "We’re cheap!"

Even after you have mastered the positioning process, you will still get price resistance, and that is normal. What's important is that you know how to handle it.

Don't get defensive

Never get defensive about your price. The first step in any objection is to get the customer to explain what he or she means.

In other words, don't just start defending the objection. Ask them what they mean. This way, you have the opportunity to understand what they are thinking.

Then, feed it back with a question. Ask them, "What I hear you saying is…," which will confirm that you are both thinking the same way.

Review the value or service experience

Before you quote your price, make sure that you have thoroughly covered the uniqueness of your service. Once you have developed a script that covers the values and unique benefits of doing business with your company, you can review these values with your client to insure that you have "buy in" from them.

Ask your client, "Is it important that the company you work with is…?" or "Is it important to you that the company you choose, does…?" By reviewing the benefits and values, you may uncover hidden objections.

This process reminds and re-focuses clients on why they are buying your service and why you may charge more than someone else. If they say that your benefits aren't important to them, and you do not offer what they want, then you must choose whether to give them what they want, or realize that you have attracted someone that is not your type of client.

For example, you sell your service based on reputation, experience, education, systems and guarantee, but the client balks at the price.

You say, "Mrs. Jones, is it important that the company you do business with has a great reputation?" She responds to that question. Then you ask her, "Is it important that the company you choose offers a money back guarantee?"

If she says "yes", then you have a chance of convincing her that to get those benefits, she may have to spend more. If she says "no", you may have attracted someone that is not your type of client.

So, asking the question, "Is it important to you that…" causes the customer to review their value system. If they answer yes to each of the questions, then talk about how each one of those values cost a great deal to maintain – there is a reason that the other guys are cheap. If they are cheap, then they are skimping on an extremely important value.

Change the scope of the job

If you get a price objection, don't be tempted to just slash the price. When you do that, you lose credibility. You basically just told the customer that you were willing to overcharge them.

Instead, review the job and see if there are parts of the job that can be done at a later date. By changing the scope of the job – settling for a smaller job instead of slashing prices, you are still getting your full price. This is important for your branding and positioning and it is important to charge a profitable rate.

Tell the customer that "we could forego this part this time. You need to do it, but you could wait to get this part of the job done." Usually, when your client sees that you are willing to work with them, they will often say, "Oh, just go ahead and do all of it."

Howard Partridge is the president of Phenomenal Products, Inc., Richmond, TX.

[Paul B. 523]

Great subject Alan!

I'd like to add a few things, if you don't mind.

How to Handle & Overcome Price Objections:

Listen carefully

Learn to accept price objections for what they are… opportunities in disguise. They are a sign of an interested customer, and with practice and skill, you will be able to overcome them (without cutting your prices!) So don't interrupt or try to handle the objection immediately. Listen carefully and patiently to what they have to say.

Make sure you understand the objection

Do this by repeating your understanding of their objection back to them ie

"So, if I have understood you correctly, what you are saying is..…"

Do not carry on until they have confirmed that your understanding is correct.

Acknowledge the customer's point of view

"I can understand why you might say that. In fact, one or two other clients started by saying much the same thing to me in the past...."

Answer the objection

Continue from step 3 by saying something like:

"…. but what they found - and I'm sure you'll find the same thing - was that...."

If they are objecting to the price, complete this sentence by using one or more of the approaches set out in the "Price objection handling strategies".

Check that your answer has met their concern

"Does that make as much sense to you as it does to me?"

Ask for the business

"So would you like us to go ahead?"

If the customer still objects, go back to step 1 and start again.

If this still fails, ask more questions to help you establish their needs and the value to them of meeting those needs.

Postpone

Postpone talking about prices until after you have demonstrated the value. "Before we can discuss prices we both need to be absolutely sure that we are right for you. So, if it's all right with you, we'll come back and discuss the price in detail when we both know what you need."

Make the value obvious

Paint a graphic picture of what is at stake, quantify the value, and help them to understand how it will make them feel.

Break into chunks Break down the price into small chunks, such as cost per use or per week. "And you can enjoy all those benefits for just $3.97 a week"

Compare to them

Compare your prices to theirs. "Tell me, are you always the cheapest supplier in your market? Well, neither are we. Like you, we charge a fair price for great products and services. And that's why I'm so excited about working with you. But if all you want is the cheapest widget on the market, I can introduce you to several cheap firms from whom you'll get exactly what you pay for."

Compare to rivals

If they tell you that Fred down the road is cheaper, say something like:"I am sure Fred knows what his widgets are worth. Just as we know what ours are worth. And that's why ours aren't the cheapest on the market."

Give them a choice

"Most customers looking for this level of service are prepared to invest (middle $). A fortunate few can invest between (high $) and (very high $). And then there are some on a budget who can't go above about (low $). May I ask which of those three categories you fit into most comfortably?" Start by mentioning a (middle $) price that is about 20% above the (low $) price you would be happy to receive. Then quote a (high $) to (very high $) range that is about 50% to 100% above your (low $) price. Then tell them the (low $) price - which you secretly know is actually the price you need. This taps into the subconscious belief that Expensive = Good, and that Cheap = Bad. And, as a result, many customers will accept one of the other two (higher $) prices.

Focus on the difference

Focus on the difference between what they say they are willing to pay, and what you are asking. "You'll get all the extra benefits you were getting so excited about a minute ago for just $4.27 a week more than you're paying at the moment. That's a big return on a very small investment, isn't it?"

Change the package

Strip out some elements of the package to bring the cost within their budget.

Easy to pay

Remove the "we haven't got the money" objection by arranging finance or accepting credit cards

Reverse the risk Reduce the customer's risk - perhaps with a money back guarantee

Trade

Trade something valuable for a price cut i.e.: prompt payment, larger order, long term commitment, special deals on their products, sales leads and referrals etc.

Walk away

If all else fails, be prepared to walk away - or perhaps introduce them to a lower cost supplier who will pay you a commission for the sales lead!

In addition many books are available on the subject including:

• How to Sell and Manage in Tough Times and Tough Markets” by Tom Reilly

• How to Sell at Prices Higher Than Your Competitors: The Complete Book on How to Make Your Prices Stick

by Lawrence L. Steinmetz, Roger Dawson, Jim Cathcart

• “Customer Satisfaction Is Worthless, Customer Loyalty Is Priceless : How to Make Customers Love You, Keep Them Coming Back and Tell Everyone They Know” by Jeffrey Gitomer

• “Value-Added Selling” by Thomas P. Reilly

• “Crush Price Objections: Hold the Line on Price Objections!” by Tom Reilly

Also, some web sites for related topics:

www.retailsales.net/Files/Overcoming%20Objections%20%28including%20Price%29.pdf

www.oacinc.com/STC/Articles/priceobj.pdf

www.integritytrainingsolutions.com/integrity/pdf/3_Circles_Issue_2.PDF

www.mgic.com/pdf/71-42039.pdf

www.salesrepswinner-net.com/academy/aobjhand06.html

Hope some of this information will be helpful to increase the percentage of your sales closings!

[RyanH 14]

Donald Trump made a good point on his show the other night. He said something to the effect of "If you don't make the sale, don't resort to begging...it makes you look weak. Simply cut your losses and walk away."

[MelissaMW 14]

Compare to rivals

If they tell you that Fred down the road is cheaper, say something like:"I am sure Fred knows what his widgets are worth. Just as we know what ours are worth. And that's why ours aren't the cheapest on the market."

Make sure to NOT talk down about your rivals. This is negative and not something you want to do. IMO at least.

As far as comparing services to what "Fred" is giving and what "You" would be giving, with our services that's easy "Well, does Fred include washing the outside of your gutters, rinsing the sidewalks, porch areas and drive way in his bid? No? Well, the dirt from your house has to go somewhere, and that's one of the places it's going to be. We rinse these areas off for you, and it's all included in our bid."

Just to try to get things on track for the Pressure Washing industry as to some suggestions to say to your customer. :)

[Paul B. 523]

Very good examples and I agree with your opinion 100%:

"Make sure to NOT talk down about your rivals. This is negative and not something you want to do."

Well, there may be one exception to this rule, and that is when I know the competitor to be a "butcher" in the trade, in which case I do not hesitate to warn of negatives. But that only happens once in a great while.

[RyanH 14]

I am very quick to point out the differences between the competition and myself. I tell my customers many of the things that are done in a conventional pressure washing routine, and then end with something like "And that is where many other washers will generally stop." Then I tell them the extra things I do to ensure their total satisfaction. It is not enough for me to have my customers get what they expected.....I want them to be completely surprised at the results. When I have worked in this manner, 100% of my customers have told me that they had no idea it could look that good. Of course, they have to agree to me doing the job before they can see results, and getting past that cost issue is the major hurdle. But, once I explain everything to them and hear their concerns, they seem eager to use me. I just make it my goal to never be unfair, and things tend to work out.

But I agree with never changing the price. Once I quote a price, I never waver from it. I will, however, add a few more services at a discounted rate to make them feel better.

--In case anyone is wondering about the extra things, it's usually the little stuff. For example, when washing the side of a house and windows, many people (atleast around here) will completely ignore the window sills, simply because more work is involved in getting on a ladder and cleaning them. When they do clean them, they usually do it with a pressure washer and some cleaner and that's it. I like to use a brush/sponge and make sure that everything is off. I got ideas like this from this group and have found them to be EXTREMELY useful. Other little things include giving the downspout routers (the things below the downspout that directs the water in a certain direction instead of allowing it to pool directly below the spout) a good cleaning. Also any large cement planters on the patios, any patio furniture that may have some mold, etc. These things may add another 20-30 minutes total to a job, but make a HUGE difference and definitely help the word-of-mouth advertising, especially in large neighborhoods.

Ryan H.

[mattia 14]

I am one of the highest priced p.w. in the area, I still receive at least 50% of my bids.

I gain their trust, than I go through process that I would use. If after that they are still arguing about price. I interupt them and look at there shoes at say " Those are nice shoes". Where did you get them? They say where ever.

Then you have them Hook line and sinker. You make small points about some thing about shoes or what ever. You could have got the shoes cheaper some place else or you wanted a good quality shoe.

But remember that if you pull up and they are driving a yugo or have a pair of kmart shoes on, you wont get them to see your way.

Some times you need to take a hard nose approach, Goods all over the world are sold at different prices and the consumer knows this, some times you need to point it out, p.w. are the same.

Just the other day, I went and bid a hood I told the guy, 550.00 he said, the other guy will do it for 300.00, I simply said why are you calling me!

Kind of rough, but it works, I washed him two days ago. We settled on 500.00 with a smile.

Confidence works well also.

Selling is a art, keep working on it.

I hope my jibberish helped some one out.

Matt