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When to Talk About Price When Selling

The question on LinkedIn inquired, “What are your thoughts on saying the price before or after you present the value?” The question presents us with a false dichotomy, a choice of one of two answers. The real answer as to whether price comes before or after you present the value you create is: “It depends.”

When Price Comes First

Price needs to be discussed early in the sales process when it is a necessary part of your qualifying. This is especially true if you have a long and time intensive sales process. You can’t afford to spend the time working with your prospective client to help them understand their needs, to capture their vision, to build a solution, only to discover that there is no way that they can afford to pay for what it is that you sell.

In some cases, you need to get price out on the table and make sure that it isn’t going to prevent a deal later.

I have seen this a few times lately when the salesperson knows that their dream client is paying a lower price and their helping them to with the result they need will require a greater investment. There isn’t any reason not to ask the question early on: “Can you invest more than you are currently to get the result that you need?”

Once you have your answer, you know whether or not you can move forward. Sometimes you have to say no to business.

The principal is this: if you need to discuss pricing to qualify, then it needs to come before the presentation. You can’t do the work to get to a presentation to find out that you wasted both your time and your prospective client’s time.

That said, you don’t necessarily have to get into specifics. You can discuss a general range and save the real price discussion until you have confirmed exactly how much value you will be creating for your client (you still want to sell the difference between cost and price).

Why Price Comes After the Presentation

For many of us in business-to-business sales, there is an opportunity to create and deliver value within a range, some of us create more and some of us less. The more value you create, the greater price you can command (that’s cost). Until you understand exactly what you can do for and with your dream client, it’s difficult to give them pricing.

Without understanding their needs, capturing their vision, uncovering their constraints, and building the right solution, you can’t effectively give them a price. You won’t know what to charge them or what is their real cost.

More still, there is the serious problem of giving prices that are divorced from the value you create. If the price is higher than your dream client imagined, then you have automatically created resistance to the price. They heard the price, but that haven’t yet seen to what that price is attached. Now, you have to go back and try to justify the price by relating it to the value you create, but the resistance has already been created.

It’s easier and more effective to put the value you create first, demonstrating the results and the outcomes that your dream client is going to receive for their investment. It’s easier, especially if your price is higher, to save that until you have the opportunity to show your client what they are buying. It gives you a chance to prove that your solution is superior—and worth paying more to obtain.

Think Steve Jobs. If you have ever watched him launch a new product, you’ll recall that he spends a lot of time giving you a deep dive into the product and how it is going to change your life. Then, after he has shown you all of the ways it is superior to anything else on the market in making your life and work better, he produces a price that is higher than Apple’s competitors. You can handle the price because you have seen what it delivers, the basis for the price (we call this cost).

It does matter whether you give the price before or after you present. You shouldn’t present or give pricing until you know enough to do so effectively. Sometimes you know enough to know that pricing is part of qualifying. Mostly, it needs to come much later.

Questions

Does it matter whether you give pricing early in the sales process? What about a range?

If what you sell is going to cost more, is there a reason not to put that discussion up front to make sure your prospective client is qualified? What if the discussion allows you to demonstrate how and why they should pay more?

What do you really need to know to effectively give your dream client pricing?

Do you personally find it easier to have the justification come before the pricing when you sell? What about when you buy something?


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Comments

comments

  • http://PeterFuller.org/ Peter Fuller MBA

    Some forget that price may be a qualifier.

    I have seen sales reps do huge presentations over multiple meetings only to discover the potential could never afford  price.

    Peter

    • http://www.thesalesblog.com S. Anthony Iannarino

      Ouch! Sometimes, even when it’s uncomfortable and feels premature, you do have to get pricing out on the table. In times like those you described, it is a qualifier. 

      Thanks, Peter!

      Anthony

  • http://twitter.com/srini_ramprasad Ramprasad

    Interestingly I have seen sales people push products or services without showing price and in fact reassuring the client on how price is immaterial; and then finally send them a bill that leaves them deeply dissatisfied. In many area this method is the practice instead of the exception. 

    What makes the client happy and pay is the value that could be created between the sales pitch and the price quotation (or sometimes the invoice). Most companies fail in this. 

    Thank for the article.
    RP 

    • http://www.thesalesblog.com S. Anthony Iannarino

      The “surprise” strategy doesn’t sound too good to me either, Ramprasad. 

  • http://www.straight-talk-online.com straightalk

    Great advice right here :: There isn’t any reason not to ask the
    question early on: “Can you invest more than you are currently to get
    the result that you need?”
    Once you have your answer, you know whether or not you can move forward. Sometimes you have to say no to business.

  • http://ideagirlmedia.com/ Keri at Idea Girl Media

    Anthony,

    I do like the way Steve Jobs presents the product, it’s components and performance possibilities, and value before getting to price.  I’d rather talk price after dialogue that gets both parties on the same page.  Though I do see some instances where price should be first.

    I believe there are ways to pre-qualify if you’re doing your homework.  What have they spent on similar projects?  What are their upcoming projects, and what priceline would be attributed?

    No sales wizard, but I am a quality over quantity kinda girl.  That mindset seems to drive the value discovery mindset, and I look for it.

    ~Keri

    • http://www.thesalesblog.com S. Anthony Iannarino

      All good advice, Keri. Especially the “value discovery mindset.” If you get that part right, you can find a way to create enough value that you can claim some for yourself and your company. 

  • http://www.conorneill.com Conor

    I think Neil Rackham in Spin Selling talks about 2 types of sale: 1) less than $100 and 2) more than $100.  In sales of $100 or less you probably have one decision maker, and you can push and push and push…  but that will never ever work in a type 2 sale – where you are likely to have a number of decision makers to influence.

    Price only matters when you know with what your potential customer is comparing your product or service.

    If Steve Jobs said “its like a laptop, but we removed the keyboard” – the comparison becomes a computer.  If he said “its like a TV that you can carry with you and use in the car” – another comparison becomes relevant.  

    Sales job is to establish this comparison before going into price.  

    How much is an extra year of healthy living worth?  Some people might pay $100,000 for an extra year of life.  How much is my course on “give up smoking in 20 days” worth now?  How much is my course on “simple exercise and healthy food that adds years to your life” worth?

  • Devon

    Interesting post, Anthony — the price subject can often become the elephant in the room in a sales process if it is not addressed.  However, I’d opt to not even discuss ballpark price until I completely understand the pains of the prospect, and he/she completely understands my company’s value proposition. You should be able to get all of that out there within the first call or two.

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