2 Things You Must Know Before Handling a Price Objection

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So you work through what appears to be a qualified sales opportunity.

You are confident that you can can meet the buyer's criteria in terms of product and support. You are even certain your price is within the decision maker's pre-defined budget.

You arrange for a final meeting to get the paperwork signed and review the implementation plans. As you begin to arrange the pertinent documents for review, the decision maker leans over and says, "Not so fast. We have a little bit of a problem. You're going to have to adjust your pricing for this deal to get done. Your price needs to come down another 5%."

WHAT?

How can this be? You wonder. I distinctly remember the prospect giving me a budget of "X". My proposal is "X" minus around 5%. This can't be right.

The buyer explains that a competitor has made the decision more difficult by providing price incentives, making their deal difficult to resist. The prospect would like you to engage and demonstrate your willingness to be a good partner by getting your price to where your competition has landed.

Now what? Your mind starts racing as to what you have in the deal. Do you call your manager? Do you ask for special pricing allowances? Do you give up some of your commission? Not so fast.

Don't do anything until you have the answer to two simple questions.

  1. Do we have the products that you want to buy?
  2. Are we the support organization you want to buy them from?

You see, for a legitimate negotiation to take place, both parties must first determine that each has something the other wants. If we have nothing the buyer wants, there is no basis for a negotiation at all.

The problem for sellers is that the buyer always has something the seller wants: a signed agreement and the resulting commission check. So who has power? The buyer does and often exercises it to get better pricing.

Why You Need to Have the Answers

The first purpose of asking these questions is to establish whether or not you have any power in this negotiation, whether or not you have anything the buyer wants. If you ask the buyer whether or not you have the products and support they want to buy and the answer is "Yes", you now have power, just like the buyer, and you have the basis for a mutually beneficial negotiation. This couldn't be more critical.

There is a second and critically important reason to ask these questions: We must determine whether or not price is the real and only objection before taking ANY action.

If we ask "Do we have the products and services you want to buy?" and the answer is a "No" or a "Maybe", is price your only problem? Absolutely not.

Asking these questions gives you the opportunity to uncover additional objections, all of which should be addressed BEFORE price negotiations begin.

We've seen many situations where a sales person adjusts their price only to later find the buyer had additional objections that needed to be addressed. There is even the potential the buyer has no intention of buying from you at all and is simply using your proposal to get someone else to lower their price.

If you ask these questions and the answer is "No" or "Maybe" and you can't determine what they need to be certain you DO have what they want to buy, why would you lower your price? They won't pay any price if you don't have what they want.

Conclusion

The next time you hear a price objection, before you react, make certain you ask these questions:

  1. Do we have the products that you want to buy?
  2. Are we the support organization you want to buy them from?

You will either establish power in the negotiation, or you'll uncover additional objections that need to be addressed before price negotiations begin.

Get the Commscope Case Study from Axiom www.axiomsfd.com

Bob Nicols

Bob Nicols has 34 years of experience in sales, sales management, executive management and sales force development. He founded Burton Training Group, now AXIOM Sales Force Development, in 1990 after being a top and highly recognized performer in sales, sales management and executive positions within the technology sector. He has managed and mentored thousands of sales people, sales managers and senior managers and been responsible for hundreds of millions of dollars in sales. For more than 21 years he has developed and delivered sales programs that have become the standard for many Fortune 100 companies including AT&T, BellSouth, Disney Enterprises, Alltel, Verizon and ESPN. AXIOM programs have been implemented in over 30 countries including Japan, the UK, Germany, Dubai, Brazil, Taiwan, Singapore, Australia, China, Mexico, Canada, South Korea, Slovakia, Sweden, and The Netherlands. Bob's highly energetic and insightful lectures and workshops have resulted in invitations to be a featured presenter at dozens of national and international sales meetings and conferences. He is a trusted advisor to the presidents and senior managers of multiple organizations, both large and small and has been a board member of a national technology company. Bob is the developer of AXIOM's “Selling Sciences ProgramTM” and co-author of the “Selling Sciences” CD series.

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Topics: Better Opportunities, Better Selling

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