How to Respond to Pricing Objections
Oct 11, 2022
9 min read
"Your price is too high."
"We don't have the budget."
"That's not worth the money."
Sales reps hear these phrases all the time, and it can be frustrating! That's because some potential customers know that a company might give them a discount after questioning the price of a product or service. Price objections can result in various scenarios. Sometimes, a salesperson gives in—especially if a prospect is nearing the end of the sales cycle—and honors a discount request. However, this tactic isn't particularly great for business.
The savviest of sales reps, however, do something else entirely. These professionals know how to ask the right questions, deal with price objections, and generate revenue for their organizations. Manage potential customers who question your prices by learning about some of the most common sales objections.
Say Nothing When Handling Price Objections
One of the best ways to handle a price objection is to stay quiet for a brief moment and take a deep breath. A few seconds of silence lets customers explain why they think a product or service is too expensive and why they're not prepared to pay the full price. Saying nothing also allows you to plan your next move and find the right thing to say.
Explain the Value of Your Product/Service to Your Customer
Every product and service has a monetary value based on extensive market research and other factors that have nothing to do with sales professionals. So offering a price discount on that product or service can lower its worth. It's also unfair to other customers who have paid the full price for your offering.
Explain the value of what you're selling to a potential customer through the paradigm of their current situation. For example, a product might cost $500 outright but could save the prospect thousands of dollars in the long run. Or it could cost them more money not to purchase the product. There could be real financial risks to the prospect if they refuse to buy a product because they think it's too expensive or can't afford it.
Here are some questions you could ask a potential customer after a price objection:
- How are you dealing with the problem this product or service could solve?
- Will it cost you more money in the future if you don't purchase this product or service?
- What risk might you encounter if you don't make this purchase today?
These questions prevent prospects from focusing on price and allow them to look at the actual value of a potential purchase.
Discover the Thought Process Behind the Price Objection
A potential customer might question your pricing during a sales negotiation because they mistakenly think a product or service is worth less than it is. Perhaps the prospect had an arbitrary figure in their head without researching the market or comparing the price of similar items on the market.
Say the customer has done their research and compares the price of your offering to that of similar products or services. You can highlight the benefits of what you sell and explain what makes it different. It's uncouth to badmouth your competition, but you can showcase your unique features and selling points that make customers think differently about your quote.
Consider the Customer's Finances
Sometimes, a price objection is genuine. For example, the customer might not have the budget to afford your product or service—and that's the only thing holding them back. You might not want to pry into an individual's or company's financial situation. But you can tell a customer that it's possible to pay in installments for your offering. While you might not receive full payment for your product or service outright, an installment plan will generate more cash over time than a price discount.
Explain the Cost of the Product/Service in a Different Way
Say a product costs $500. A customer might think that's a considerable amount and ask for a price discount. At this point, you can reframe the cost of your offering by breaking down its price into a daily, weekly, or monthly figure. For example, telling the customer that the product will cost $9.61 a day might result in a sale because they perceive it to be less expensive. Suddenly, that first price doesn't seem so scary.
Use a Hypothetical Situation
This is one of the most effective ways to manage price objections. First, ask your customer if they would purchase your product or service if they had the funds available. A hypothetical situation like this will help you establish whether the customer is a good fit for what you sell or wants a price discount for the sake of it.
If the customer says 'yes,' further explain the benefits of your offering. Showcase the product or service's value and how it can solve a genuine problem. Or demonstrate what the customer could lose from not accepting your quote at that moment.
Dealing With Customers Who Only Make Purchases Based on Price
As mentioned above, some customers only respond to price reductions and feel they get more value when a rep discounts a product or service. If you have explained the value of your offering—and the many benefits it can bring—and the customer still doesn't budge, it might be time to call it quits. The prospect is only after the lowest price on the market in a situation like this. Note behaviors this customer exhibited during the sales cycle to prevent this situation from happening again.
Change Tactics If a Customer Can't Afford Your Product/Service
Some people genuinely can't afford what you're selling, and that's fine. In these scenarios, remain pleasant and offer to send over some supplementary information about the product or service. Never push a sale after hearing a hard 'no' because of budget issues. It reflects negatively on your company, and your manager might bring up your selling tactics in a performance review. You can always follow up with the customer in a few months and see if their financial situation has changed.
What To Do If a Customer is Not Sure
If a customer is in two minds about purchasing your product or service, send them supplementary materials and follow up with them in a few months. Some prospects will take a little time to decide whether they need your offering and might come back to you soon.
Remember, even if a customer doesn't make a purchase that day, you can still build a relationship with them. Perhaps you can send information about other products and services that match the prospect's needs.
How FiveCRM Helps You Respond to Pricing Objections
Typically, a pricing objection will happen after a customer has moved through your sales cycle. You have already nurtured them, provided marketing materials, and communicated with them on several occasions. To counter a price objection, you need as much information about the customer as possible. Reviewing information such as a prospect's interests, behavior, desires, and previous purchasing histories will help you decide on the best techniques to deal with a price complaint.
FiveCRM is a customer relationship management (CRM) that helps you collect, manage, and analyze customer information in a centralized system, allowing you to move more leads through sales pipelines. This software lets you establish the most effective selling strategies that reduce the chances of a pricing objection. It also provides the information you need to deal with a complaint about the price of your product or service. You can also keep track of all customer conversations in one place for better lead management, lead generation, telemarketing, cold calling, outbound calling, inbound calling, and more.
FiveCRM is a CRM that:
- Improve sales efficiency for inbound and outbound efforts by managing callbacks, simplifying workflows, and automating dialing sets. You can also use this software to reduce call transition times in a call center environment.
- Allows you to manage up to 99 separate databases, helping you grow your business. FiveCRM can also offer unlimited data storage.
- Generates more leads through its performance and marketing tools by tracking operational performance. Find out what's happening in your sales department, improve sales processes, and drive more revenue for your organization.
- Manages leads that move through sales pipelines with customizable lead scoring tools. You can focus on high-value leads interested in your products and services and improve the qualifying process.
- Gathers and tracks real-time data about sales department performance. You can also access metrics that boost sales growth and identify patterns and trends in the data used by sales teams.
Be prepared for any price objection in the future when you invest in a CRM made for sales teams. Contact email@example.com, or get FiveCRM now!
Michael King says...
"I can’t think of a time where a client has requested something that we weren’t able to do with FiveCRM. Unlike most systems, it has a lot of flexibility."
Managing Director, Senior Response
JANE HUSBANDS SAYS...
“Each client, and each of their campaigns, has its own unique specifications. We essentially needed to set up mini CRMs on one platform to meet those requirements.”
Operations Director, Team Telemarketing
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