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Remember a few years ago, when customers couldn’t get enough of whatever it was we were selling?

Those were the days.

Customers called, we provided them a price, and they said “Great – how quickly can I get it?” or “Great, when can you start?”

Times have changed.

If there’s one complaint I hear more than any other from sales professionals today, it’s that customers are pushing back on price.

Hard.

Some of this is tied to the economy, but there is also a resurgence of price sensitivity.

So the question is, how can we respond to pushback on price, while not insulting our prospects and still ensuring we close the deal and maintain margins?

The answer isn’t a simple one, and it can differ depending on what you sell. However, there are some strategies you can use to protect your margins and avoid ticking off your prospects.

Here are three strategies I share while speaking at company sales meetings that have been implemented with great success by participants.

1. The “Hedge Your Bet” Strategy

In this strategy, you increase your selling price when you suspect that your prospect is going to request you reduce pricing.

This strategy can be challenging when you are in a competitive situation, as increasing your price can make your offer appear unappealing. 

However, it can be effective if you are confident the prospect will request a reduction in price. In this instance, you position your selling price slightly higher than the amount required, allowing you to reduce the price during negotiations and not threaten your required margins.

2. The “In All Fairness” Strategy

If faced with a prospect who is pushing back on your price, one option you have is to maintain the price without being flexible.

This approach isn’t always successful. However, it comes in handy if you are confident your prospect NEEDS what you sell. This may be the result of your available capacity, an urgent need you can satisfy, etc.

With the “In All Fairness” strategy, when your prospect pushes back on price you would respond with “In all fairness to our other customers, I couldn’t in good conscience reduce the price any further.”

The key to this strategy is that once you make the above statement, you make an offer to the prospect that increases the value of what you offer, without impacting price. So you might offer more of your time (if you sell a service) or faster delivery (if you sell a product).

The additional value you offer will influence the perceived selling price as being reasonable to your prospect.

3. The “Where Would You Like to Reduce the Price” Strategy

If the above two strategies won’t work, then you should focus on educating your prospect on total cost. 

The selling price you offer consists of numerous costs. In this strategy, when your prospect pushes back on price, your job is to educate them on what goes into the final selling price, without sharing margin of course.

Simply draw a vertical line on a piece of paper, then add several lines that cross the vertical line. Label each line you draw with a fundamental component that contributes to the total cost AND could potentially be adjusted by your prospect.

Suppose you sell commercial insurance, for example. You might have lines that represent:
• The claims history
• Amount of coverage requested
• The deductible of each claim
• The duration of the term

Once you identify the components of your price, ask your prospect if they would like to make adjustments to any of them. Using the example above, you might ask:

 “Are you able to confirm the accuracy of your previous claims? Is it possible you’ve overestimated one?”

If they say no, move to the second item, where you might ask:

“You’ve asked for X coverage, are you willing to reduce the coverage?”

You get the point. 

Your goal is to help your prospect understand the core components of the price and, in turn, ask for their help in changing the criteria that influence the final price.

This approach does three things:

1. You engage the prospect in an exercise to address their price concerns.
2. You educate them on what goes into the price.
3. You seek collaboration on addressing their pricing concerns.

Regardless of what you sell, using one or more of the solutions described above can help you reduce the amount of price pushback you receive AND ensure you maintain margins — all while educating your prospect on the fact that you won’t cave to their every price demand.

Which of these strategies will you put into place today?

 © Shawn Casemore 2024. All Rights Reserved.

Shawn Casemore is a speaker, consultant, and author of the forthcoming Unstoppable Sales Machine (due out September 2020). To learn more, visit www.shawncasemore.com.

© Shawn Casemore 2022. All Rights Reserved.