Salespeople who sell a product or service with a higher price complain that it is more difficult to sell, believing their competitors with a lower price have it better. Many withhold their pricing as long as possible because they are worried the high price will cost them their deal when that strategy is the very thing that makes it more difficult for them to win. If you want a competitive advantage, you will reveal your higher price early in the process.
Bad Ideas About When to Disclose Your Price
Some sales systems provide the guidance that you should never reveal your price until your prospect has given you time to do your discovery and diagnosis. The idea makes perfect sense in theory but is problematic in practice. If you aren’t able to speak your price when asked, it looks as if you are afraid to disclose your higher price, or that you might be trying to take advantage of your prospective client.
Because it is difficult to disclose your price before you know precisely what you are providing pricing for, your best option is to confidently and boldly offer a range. By doing so, you retain the ability to effectively price your offering while showing no fear of engaging in a conversation around the investment necessary to provide the results your prospective client needs.
If your price isn’t going to change, there is no reason not to share it when asked. If your prospective client can’t afford your price when you share it at the beginning of the sales conversation, they can’t afford it at the end. If they are unwilling to pay the higher price when disclosed early, they will be unwilling to pay it later in the process.
Building Value Over Time
The premise that the strategy of waiting to disclose your price is built upon is the idea that you need to develop the value of what you sell first to justify your higher price. What makes this strategy so tricky is that once you are through the conversation and provide pricing that is higher than your competitor’s, you are going to be asked to justify the difference between your price and your competitor’s after the fact.
If your client hasn’t perceived the difference in value between you and your competitor by the time you provide the pricing, you put yourself in the unenviable position of having to differentiate your offering and sell the value at the very end of your client’s process. Not only is it more difficult, but you also have very little of your prospective client’s time in which to do it.
The approach is a large part of why salespeople with higher prices believe they lost on price when they lost because the client didn’t perceive the higher value of the greater investment they were being asked to make.
Positioning Your Greater Investment
If your price is higher than your competitors, there is no reason to hide that fact from your prospective clients. It is evidence that what you sell is better, as things that cost more are generally superior to things that cost less. It is evidence that other people are willing to pay more for what you sell, validating the fact that for some people, it makes sense to invest more in specific outcomes. Additionally, it provides two results you cannot obtain if you wait to deliver pricing late in the conversation.
- Positioning: When you share your higher price early in the sales conversation, you position your offering as being superior to others without you having to say a word about your lower-priced competitors. The fact that you are not afraid to say that you have a higher price than your competitors is strong evidence that you are worth paying more for. It will differentiate you from your many competitors who will do everything they can to wiggle out of an investment conversation early in the process.
- Time to Differentiate: Disclosing your higher price early also provides you with the opportunity to ask your prospect to explore what makes you different, why you do certain things differently from your competitors, how you invest more in producing the strategic outcomes your client needs, and the concessions they make by choosing a competitor with a lower price, something you are deprived of down the home stretch.
By disclosing that your investment is going to be a little higher than your competitor’s early, you position your offering as being better, and you give yourself the entire sales process to help your clients understand the value they receive by investing more.
The Concessions They Accept
Trying to help your prospective client understand the concessions they’re going to make at the end of the process isn’t nearly as effective as sharing them earlier in the process. It looks like you are defensive about your price, and it causes you to start trying to pick apart your competitors after their prospect has spent time with them.
Waiting to share the concessions you refuse to make late in the process is not as effective as differentiating throughout the entire process by explaining the different models one might use to produce a better outcome. You not only give yourself more, but you also have the upside of being able to have multiple opportunities to make your case, provide proof, and answer questions. Throughout the entire process, you want to differentiate the value you create while also creating a preference to work with you because of the experience.
When to Defend Your Price
The choice one is making here is between justifying the more significant investment throughout the process (selling on your front foot) for waiting until it’s too late (selling on your back foot). You are deciding whether to play offense or defense. If you want to play offense, sharing the greater investment necessary to produce a better result earlier in the process provides that opportunity.
Waiting to surprise your client with your higher price at the end of the process puts you on defense. Prevent defense, since you are trying to prevent losing instead of trying to win. If you don’t want to be asked to sharpen your pencil, share your pricing earlier and spend all your time making sure your client feels the difference before they ever decide to sign your contract.
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Filed under: Sales