“But Your Price Is Too High”


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It’s the customer’s moral and business obligation to always challenge you with, “But Your Price Is Too High.” This isn’t a problem or issue.

What is the problem, is the mindless response from sales people, immediately offering a lower price. Or even worse, anticipating the objection, discounting in advance–it doesn’t preempt the objection, it just means you have to discount further.

For an objection that happens in every single sale, you would think sales people would be so much better at handling it, but the most common response is a discount, without any understanding of what’s needed or why or why you should even discount.

Before I go further, I’m not naïve. I’m not saying we won’t have to adjust our pricing. All I’m arguing is that we and the customer must establish a sound basis for evaluating the pricing vis a vis the value of the solution to them. Without this, it’s impossible to know what’s reasonable and what’s not.

When the customer say, “Your price is too high,” the first thing we need to do is understand the basis for the statement. Why do they think the prices is too high? Are they just saying it because they are obligated to saying it? Are they comparing your pricing to competition? Are they comparing your pricing to something else? To make that statement, the customer must have a basis for it. Our job is to probe and understand that basis.

Until we understand why they make that statement, we have no basis for any discussion about pricing. We also have no basis for negotiating, if and when we ever get to that point.

“We’re not used to paying that price!” So what, this is meaningless when positioned against the return they get from the solution! If we have a powerful business case, what business executives want to get is an outstanding return with low risk. Sure they want the best price, but now we discuss the price in terms of the ROI.

“Your competition is cheaper!” So what! If we accept this, then we are saying our value is no greater than our competitors and we have no differentiation. What you are saying to the customer is, “You’re right, we’re no different than the alternatives!” Get real, we’re sales people! Our obligation is to understand what our customers value then to create and communicate relevant, impactful, differentiated value to the customer. Our job is to create a business case that demonstrates that value in a compelling way. If we aren’t doing this, then we aren’t doing our jobs.

But the competition says “Me too!” They ride your coattails saying they can do the same. They also have some cool wizbangs that further differentiate them from you. Don’t allow them to do that! Don’t let your customer allow them to do that! Your customer is doing themselves a disservice if they don’t force each vendor to develop clear and differentiated value propositions and business cases. Make sure they understand this!

The customer must have a clear basis for making a choice, we have to give that to them, we have to make sure they demand that from everyone they are considering. Don’t let anyone take the easy way out by saying, “They are all the same, it’s just a matter of pricing.” The alternatives are never the same—even in commoditized products. Risk, vendor stability, vendor confidence, relationships, vendor reliability, quality, and the list goes on. Nothing is ever the same.

Most of all, the differentiator is you! What you do, the insight you bring to the customer, the work you do in facilitating their buying process, the relationship you have are all important differentiators.

Sure your price may be too high. Sure you may have to negotiate. But force yourselves and your customers to do this in a context that is meaningful and based on value delivery. Never let it be arbitrary, never defeat yourself by failing to position your pricing in the context of value to the customer. That’s what professional selling is about.

This post was written as part of the IBM for Midsize Business program, which provides midsize businesses with the tools, expertise and solutions they need to become engines of a smarter planet. I’ve been compensated to contribute to this program, but the opinions expressed in this post are my own and don’t necessarily represent IBM’s positions, strategies or opinions.


Republished with author's permission from original post.

Dave Brock
Dave has spent his career developing high performance organizations. He worked in sales, marketing, and executive management capacities with IBM, Tektronix and Keithley Instruments. His consulting clients include companies in the semiconductor, aerospace, electronics, consumer products, computer, telecommunications, retailing, internet, software, professional and financial services industries.


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