Price objections are often the stumbling block of negotiations. Savvy buyers want to secure the best possible deal and know that the nearer a deal is to closing, the more vulnerable a salesperson is to price-cutting strategies. However, if you cave every time you’re faced with a tough negotiator, then you’ll leave your profit margin in tatters. Here’s our guide to the strategies buyers use to cut the price and how you can handle their objections.
“That price is too expensive”
Almost every savvy buyer will object to the first price, it’s been the dance between buyer and seller since time immemorial. One way to counter this common strategy is to always go in with a price much higher than your actual redline, lowest price which then gives you room for manoeuvre. But before you jump the gun and lower your price, try asking the buyer why they feel that way and what they are basing their price objections on. Their answers will guide your next step, for example, if they contend that the cost they paid previously was lower, you have the opportunity to counter by pointing out the issues they’ve faced and why your solution is superior.
“Our budget is $xxx and we aren’t willing to go above this.”
Again you need to use questioning to uncover the basis of their objection. How did they come up with that figure? What are competitors offering? You need to ascertain whether the figure quoted is the actual budgeted amount or whether it's a ploy to get you to lower your price. Talk to them about fair market value and how your product sits in the marketplace. Demonstrate value and why your price is what it is - outline the benefits and long term gains they will win by the extra investment. If they really can’t budge, try and work together to come up with a solution that’s within their budget but perhaps doesn’t have some of the added features they would get for the higher cost.
“That price is ridiculous!”
If you’ve offered a fair price and the buyer is shocked, then either they really don’t understand the market or they are being theatrical. Remain calm and don’t get flustered or offended. Calmly ask why it seems high to them. You can then explain your pricing and differentiate on value. Most times you will find that people back down once they are confronted with reality and you can back up your figures with facts.
“A competitor has offered a lower price, we’re going with them unless you match it.”
Being undercut by a competitor does happen, unfortunately, but this tactic can also be a simple ploy to get you to lower the price. Instead of panicking and meeting their demands, say something like, “Really? I’m amazed that they can offer the same great value that we can for that price. Can you give me some more info about the deal they are offering?” If they are bluffing, it will be fairly obvious from their response and you can hold your nerve. If they aren’t bluffing then ask if you can get back to them. Use this time to decide on what level of concession you are willing to make - remember if you give up too easily, they will always expect this from you.
The CPSA offers training programs that will help you improve your negotiation skills and be better prepared to handle objections
on price and many more. Check out our training here