Defending Your Price. Even When Everything Goes Right, You Can Expect to Be Asked.

Defending Your Price. When Everything Goes Right, You Will Be Asked.

There is an enormous difference between price and cost. Being able to sell something other than price is challenging. In order to succeed you have to do many things right leading up to the end of the sales cycle. But even when everything goes perfectly, you are still going to be asked for price concessions.

They Have to Ask

It doesn’t matter whether or not you have made your case that the investment will produce far greater returns than a lower priced (but higher cost) alternative. It doesn’t matter if you have agreed in principle that it is worth investing more to produce the necessary outcome and that you have a proven return on investment analysis. It doesn’t even matter if you have guaranteed their investment, promising to deliver the result or accept a reduced price.

Your dream client has to ask for a price concession at the end.

It’s All Part of the Dance

Your dream client believes that they have to ask. They believe that it is their duty to get their company they very best deal that they can get, even when you have already proven beyond a shadow of a doubt that you have the best solution, and even when you have proven that there is a different between price and cost.

Asking is all part of the dance.

And, if your deal was the best deal at the cost you proposed, it’s and even better deal at a lower price point, right?

Wrong.

Dancing: Defending Your Price

This is really three or four posts, but here is the short answer.

Your role in sales includes the task of helping your dream clients understand that there are certain costs inherent in producing a certain result. A higher price allows you to produce greater results because you are making enough money to invest in generating those greater results. Reducing your price means you have less money to invest in generating those results, and, ultimately, you can’t produce the promised outcomes.

Much of the time, overcoming the stubborn constraints that are preventing your dream client from producing the results they need requires a greater resourcefulness (from you) and a greater financial investment (from them).

In order to defend your pricing at the end of the sales cycle when your dream client asks for pricing concessions means you also have to understand the above ideas. But you also have to come to grips with the Iannarino Principle: Your job as a professional salesperson is to create so much value for your dream client that you can confidently capture part of that value for your company and for yourself.

You might have higher margins because your price is higher. There is nothing wrong with capturing a greater amount of the value you create when you are also creating more value for your dream client. To successfully defend your pricing—and the value you will create—you have to know this intellectually, and you have to be comfortable with it psychologically and emotionally.

Questions

Why does your dream client feel obligated to ask for a price concession, even when you have made a clear and compelling case for you solution and price?

How do you defend your pricing?

By making price concessions, do you put your ability to provide the results that you sold and promised at risk?

What do you have to believe about the value you create in order to defend your pricing?


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Comments

comments

  • Steve G

    You’ve made some really good points in this post, nothing more important than the need for a salesperson to create VALUE.

    You asked some very direct questions:

    Why do clients feel compelled to ask for a “price reduction” even though you’ve made a clear & compelling case for your product/service? I strongly believe it comes from past experiences, and a client’s thought that everyone “starts high” before settling for the “real” price. We, as sellers, have conditioned clients to act this way. You’re right, it is a dance, and we need to change the song.

    How do you defend your price?
    This is an excellent question, and I guarantee you that if you ask this of some salespeople you might get answers such as…”well, that is the price my boss gave me!” or “That is what I need to give you this idea/solution.” I believe the answer is a combination of Supply and Demand and The Value You Have Given Your Idea. (I realize this is a vague answer) I also believe that you have to be willing to walk away to demonstrate that the price you provide, is in fact the price that the client has to pay.

    I don’t believe price concessions put your ability to deliver your promise at risk – at least it shouldn’t – but I do believe that, depending on the depth/size of your concession, you leave yourself open to having the client question your integrity and value each time after. Sometimes, part of your negotiation needs to be “no negotiation – the price is what it is.”

    In the end, a seller needs to believe there is specific value in their product/service, and belief that there product/service will be a benefit to the client. Where there is Belief there is Value.

    Thanks for the conversation – greatly appreciated.

    SPGonz

  • Tommy Jax

    Very good points made in your blog. To avoid price concesssions surprises, sell value but also talk bottom line as you progress. Don’t wait too long to discuss price. Economic decision makers are always thinking cost first especially in this economy.