Ways to Respond to Your Price is Too High
People would have laughed at you if you had told them a decade ago that there are ways to respond to high prices! The internet has made it easier than ever to learn just about anything you want. So with all this content and information available, how did you know which ones to learn from and which ones actually work
Luckily for you, BBC Member, we’ve produced a list of ways to respond to your high price. Remember, that while the first step is completing any of this amazing information, the second and possibly more important step is taking action even if it’s imperfect action.
“Your asking price is way too high!” Regardless of what we sell, we have all heard this a lot. Sometimes it seems like our prospects will reject our price offer no matter what it is. It’s almost like they are trained to respond in this knee-jerk manner. Perhaps they have received the necessary training? Our hypothesis is that every consumer, including you and us, responds in this way and should behave in this way as a result of our research. We discovered that our responses to price and just about anything we purchase are psychologically conditioned to be the way they are. Let’s examine this issue more closely now.
Price Realization Difference
Since we all know that customers never pay MSRP, Rarely are the costs that consumers see in publications like catalogs, websites, car stickers, shelves, or quotations that we actually pay. Pricing professionals refer to this difference between the price requested and the price actually paid as the “price realization gap.” The phrase “pocket price” refers to the actual amount paid. Almost every industry and virtually every product and service on the market exhibits this gap.
The primary cause of the price realization gap is that sellers offer customers incentives in various forms in order to close the sale. This might be the result of intense competition, a deal for the end of the quarter, the introduction of a new product, an inventory management system, or even the fact that you need this specific sale to earn your bonus. For whatever reason, we are taught as consumers that the price displayed is merely “suggested,” and that the price we ultimately pay will always be less.
Did you know that 90% of Americans use coupons to reduce the cost of packaged goods and groceries? Additionally, when we type in our phone number at the grocery store checkout, extra money just appears. Popular websites like Kelley Blue Book, Edmunds, and TrueCar give you the “fair purchase price” when you’re buying a car, you can easily print what you should be paying, take it to the dealership, negotiate the price, stick it on top of the sticker, and tell the salesperson, “This is what I will pay, take it or leave it!” Purchasing something online? For tens of thousands of online retailers, Retailmenot offers discount codes that you can use at the checkout. Then there are Groupon and LivingSocial, which elevate digital coupons to a whole new level by offering discounts for a variety of goods and services that can reach as high as 90% in some cases. The list is endless.
What effect has this had, then? There is no longer a single fixed price for practically anything, which is what has happened. The price that is listed for a good or service is simply the most that a customer could be willing to pay. If you pay it, you are basically a sucker! If a potential customer tells you that your price is too high, you can’t hold it against them because, unless you offer all of your discounts and incentives up front, it probably is. Don’t let this irritate you when you hear it from your perspective because we are psychologically programmed to react in the way we do whenever we see a cost for something.
Having said that, what should salespeople do when they encounter the objection that the price is too high?
A pound of treatment is worth an ounce of prevention.
You should nudge a client a little on price before you put together a proposal and possibly even before you meet with them. Before you put in the time and effort to provide a firm quote, everyone will have a general idea of what to anticipate.
By using phrases like, you can do this without feeling gross or leaving money on the table. Do you think that’s what you meant when you stated, “All my projects start at XYZ?” Is that what you were thinking? A similar project came in around XYZ. Every project we work on begins with an audit, which costs XYZ. Here are the items the audit covers. Would you like to continue?
(*Note that in order for the third option to be successful, your audit/entry-level offer must be in line with the cost of your project. Therefore, you cannot charge $50 for an audit while starting your projects at $1,000. For the $50 audit to provide any useful information about their willingness and ability to spend $1,000, there is an excessive price jump.)
However, suppose you floated a price and they responded by saying they couldn’t afford it.
Now, we’ll say that frequently, the financial barrier isn’t the real one. They might have that much money available, but they don’t think it would be worthwhile to use it for this project. Those objections may or may not be addressed during the sales process, but that is a subject for another time.
Whatever you do, avoid dismissing what they have told you out of hand by saying things like, “Oh, it’s not that much money.” The client will feel as though you’re not paying attention to them and either leave right away or strengthen their conviction that they cannot afford you. Say goodbye to your sale.
Do not accuse them of not appreciating quality work or not desiring your delivered results with enough fervor by using passive-aggressive language. You know who nobody wants to work with, right? An absolute gaslighter. You are unfamiliar with their daily routine and business. Let them be the authority on what they are capable of.
Okay, now that that has been clarified, let’s assume that they actually lack the financial resources to collaborate with you.
- Determine your goals
Choosing whether you still want to collaborate with this client on this project should be your first priority. It’s acceptable that some projects are only worthwhile if you’re getting paid well to work on them. That’s actually a wise move because, if you accept a project at 20% less than what you originally requested, you forfeit the chance to work with someone else who might be willing to pay your full price.
If you don’t want to accept less cash, kindly express your appreciation for them sharing their business requirements with you. If you know of any other service providers, you can recommend them or simply wish them well.
There are options available if you still want to work on this project with this client.
- Change the project’s scope
Reducing the project’s scope is the first remedy that most people try. Given that posting social media content is a straightforward, repeatable process, you might offer to create the content while leaving the client in charge of doing so. Alternatively, you could construct their website’s home page and then design a template that they can use for the rest of their content pages.
When it comes to the parts that the client will complete on their own, make sure you are still positioning them for success. Make a plan for how to fill the gap and how to update that later if you’re going to skip some steps in the process for the time being. If the client will be doing some of the work themselves, manage expectations about how things might look and function differently because you always want to deliver the results that you promise.
- Provide a shortened timetable
Time spent on customer service and opportunity costs incurred during the project makes up a sizable portion of any project fee. You will need to say no to some other opportunities during the course of a 6-month project or keep the project active the entire time (at least mentally).
By compressing a project into a VIP day or week, you can save some time and money. Offer a specific period of time to complete a specific range of work. Once that is over, you are done. The VIP day/week also has the advantage of making the client accountable for making the most of the time they have paid for. When they are aware that they only have a day or a week to complete tasks, they are more likely to finish their homework on time, reply to messages promptly, etc. (Be sure to state clearly what you expect from this right away.)
- Present an extended timetable and payment plan
The alternative is to lengthen both the project’s timeline and its associated payment schedule. Make the project a 6-month one rather than a 3-month one to give them more time to pay. This is useful for clients who have limited cash flow because they can generate the necessary funds for the project but may not have them all at once.
When extending the timeline, exercise extreme caution. Longer projects frequently require more energy than shorter ones, especially if you’re juggling them with other tasks. To get yourself and the client back up to speed on something you haven’t touched in a month, you’ll need to allow some time. To reduce the amount of task switching required, we advise treating an extended timeline like a series of VIP days or weeks. We would also associate payments with particular milestones to make sure there is clarity around what is anticipated to be done and when.
- Present a payment schedule
The client’s final option is to repay a portion of the project charge after the work is completed. We advise only recommending this to clients you have previously worked with or who you know will respect your boundaries. ( We would actually advise against doing this with friends and family.)
- Recognize your competitors
Know who your main rivals are and how your product or service differs from them. In the early 2000s, when we were selling Pontiac Vibes, We were aware that the Toyota Matrix was my main rival (both produced at the same production plant). We made it our responsibility to be aware of the differences between the Pontiac and the Matrix as well as its flaws.
- Put value first
The majority of people who raise a price objection are already aware of what your competitors’ goods or services are and how they differ from yours. Keep the benefits of purchasing your product or service as the main focus of your presentation. What additional value can you offer that goes beyond the actual product? Improved client services? Extended warranty terms? Fewer returns?
- Have a distinct ROI
Be specific about the returns your product or service offers when describing it. A sale is when a customer exchanges money for a valuable commodity or service. The sale becomes simpler the stronger the return on investment is, and the more you can communicate this. What is the product or service’s return on investment?
- Provide clear pricing
Never try to avoid or put off talking about price. Delaying (or waiting until asked) a price discussion only breeds skepticism on the part of the customer. This is not to mean that you should start with the price, but make sure you mention it straight immediately after you’ve addressed the three reasons mentioned above if it isn’t already evident.
- Offer price ranges
The odds are against you when a price is a black-or-white choice. You significantly increase your chance of closing the sale when you can include options. Make sure to offer choices at various price points.
Pause for reflection before moving forward. It will give you time to collect your thoughts, but it also gives the prospect the chance to justify their position. Someone usually starts talking after a few seconds of silence, and if it’s the prospect, it could be very helpful because they might give you a lot of valuable information you can use.
- 12 “Give and Get”
When clients request a discount, find out what they are prepared to give up. This is consistent with selling products based on value rather than price. Find out which features, for instance, if your good or service has a lot of them, they would be willing to give up for a lower price. If your product is bundled, you may need to unbundle it. A “unilateral concession” is when you make a concession without expecting anything in return, which is something that salespeople do far too frequently. This gives the impression that you initially overcharged your client.
- Pose inquiries
Understanding the customer’s perspective is crucial, and the right questions will enable you to identify the main cause of the objection. Here are some excellent inquiries to make:
- What is too expensive in comparison to?
- Have you discovered a less pricey option?
- How high have we climbed?
- What did you anticipate paying?
- Do you mean the initial cost or the overall expense?
- Is the cost the only thing keeping you from signing?
- Do you have a target ROI percentage in mind?
- Client testimonials
Referencing three or four of your customers who are of comparable size, work in the same sector, faced the same problem, and felt the same way is a great way to address this objection. Nobody will be able to sell your customer more effectively than a different customer. Get them on the phone with the other company and allow them to discuss their experience and outcomes. Send a follow-up email with several case studies of additional customers, emphasizing the return on investment they experienced after using your product or service.
Let’s get down to what to SAY in these circumstances. The phrases to use, which will support you in upholding your boundaries and the client relationship, are listed below.
Just a quick reminder that these conversation starters are meant for potential clients who are already somewhat interested in working with you. You can use them in follow-up emails, sales/discovery calls, and initial response emails.
They cannot be used for
- arguing with random strangers on social media who will never hire you and defending your life decisions to skeptical family members’ price
- confronting “competitors” who are attempting to lower your self-esteem by projecting their uncertainties and ignorance onto you.
Part 1: Measuring If the customer finds your price to be too high
Keep the conversation brief and straightforward at this point. Ask concise questions that only require a yes or no response. This gives everyone a polite way to leave if necessary or it sets them up to answer yes to additional questions in the future. Be quiet after you’ve asked so they can respond. Do not become alarmed by the silence.
- Would you say that sounds like what you had in mind? All of my projects begin at XYZ.
- Is that what you were thinking when you heard about the project XYZ?
- Every project I work on begins with an audit, which costs XYZ. Here are the items the audit covers. Would you like to continue?
- The majority of my [project types] fall into the ABC-XYZ range. Are you able to handle that range?
Part 2: Validate When the Client Can’t Afford Your Price
If a customer rejects your price feelers, you HAVE to admit that they think your price is too high. Why? Because doing so demonstrates that you respect them as experts in their own lives and businesses and that you believe them.
They will feel ignored if you try to convince them to spend more money right away than they are willing to. They will either maintain their stance or say they cannot afford to hire you. Ever say, “Oh, it’s not that bad,” to someone? How was that for you? or do they stop participating in the conversation? They’ll wish they were somewhere else even if they stay. You should never begin a client relationship that way.
Don’t give a state of the union address once more. Give them time to respond after using some of these affirmations. Put aside your own agenda; until the client has faith in you, you won’t get what you really want. Work any information they’ve shared with you about their motivations or other current events into the validation naturally and without criticism.
- That seems to have been more than you had hoped to spend on this undertaking.
- If you’ve never invested this much money in XYZ, I can imagine it’s intimidating.
- Given what you’ve told me, it makes sense that this might be a stretch for you.
- I wonder if returning to a project of this size would be advantageous when [X circumstances are different].
- I appreciate you being honest about your financial situation. Although the budget isn’t there right now, it sounds like this project is very important to you. I’d be delighted to send you [recommendations, DIY instructions, courses, etc.]
You can respond to a price objection in a number of ways. Always take the initiative, and practice the various responses we’ve mentioned, choosing the ones with which you are most familiar. If your customer complains that your product is too expensive or that your price is too high, you won’t miss a beat if you are prepared. That is frequently your best strategy for dispelling price objections.
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