Entrepreneurs must wear many hats. There’s the day-to-day business to take care of, all while making sure more business is funneling in for continued growth and success. While everyone running a business must be a master of their product or service, they also must be good at selling.
Many entrepreneurs are pretty good at getting the interest of a potential prospect, but often lose in the final negotiations, especially when there is an objection over the price. After all the work of eliciting the interest of the prospect, don’t lose the deal over a mere price objection. Be prepared to handle this and retain the client.
Try these seven techniques next time you find yourself in this situation.
Don't make it sound as if there is room for negotiation
Let the customer bring up the word “discount.” Don't bring it up yourself. How many times have you heard a salesperson say, “The list price is $x, but if you pay cash I could bring it down a little.” Don't do that. You’ll appear desperate, you put the ball in the customer’s court and you’ll be playing catchup the rest of the negotiations. It’s like waiving the white surrender flag before you’ve even talked numbers. The most important feeling to bring to a price negotiation is self-respect.
Use some catch phrases
Every sales professional needs to be ready for the price objection, and that means having a few catch phrases ready to roll off your tongue. It's important to think on your feet and be verbally convincing. When your client comes up with the price objection, you draw one of your catch phrases. “Thrift is good but quality is better.” “Cutting the price means cutting the quality, and that is not an option for us.” “The grass is always cheaper on the other side.” “Other offers are cheaper—and they deserve to be.” “Go with the cheaper option, and things will get really expensive.”
Combine the price with the notion of value
When your client says that you're “too expensive,” don't go down the lame old “Too expensive compared to what?” road that's still preached in many sales seminars. It's the start of a downward spiral where you're on the defensive and lose control of the game. Don't try contradicting the “too expensive” objection. Your price is higher than others and that's a good thing. Instead, say, “You’re right, it is pricey. It’s pricey and high-value. High value because…” and elaborate on the benefits of the product.
Hold firm on the price but ease up on the concessions
Once the customer wants a discount, that’s a good thing because it means he wants to buy from you. You’ve sold him. You can get creative and offer a small discount in exchange for more orders or payment in advance, something that also benefits you. A good sales professional does business but not for free; she holds firm on the price but is generous with minor concessions.
Get in the habit of pencil selling
Pencil selling is a great way to show your buyer the deal they are getting by spelling out on a blank sheet of paper exactly how they will benefit from an investment with you. Reciting the numbers is one thing, but when you see them on paper it’s something totally different. What works best is to ask your client for their figures and even let them tally up the figures for themselves. This technique helps you remain in control of the negotiation because it makes the client feel as if they are in control.
Use diminutives when articulating the price
This may sound like a minor detail, but it can make a huge difference. “The quad bike is going for eight” sounds less than “eight thousand,” or “The service contract is twelve” sounds less than “twelve hundred.” When selling internationally, giving the price in the local currency instead of dollars can make your offer sound more attractive, if that's a smaller number. If, on the other hand, you're pointing out what the customer stands to gain, use full numbers: “At the end of the day you've saved yourself $434.”
Know how to present the price in a proposal
The price should be folded into the description of the benefits like the meat in a sandwich. “You will receive a new writing desk, with two drawers, as requested, a hanging file folder, and two cable connectors, for $2,942.11. Of course, this will include the adjustable legs, designed for ergonomic sitting positions, and the power strip attachment.”