There is a delicate balance between proposing a price that is too high and dropping your pants.
There is a delicate balance between proposing a price that is too high and dropping your pants. If your price is too high you could be eliminated from the deal early. If your price is too low you may win the deal but take a hit to your commission check. How do you know when you are giving in to early on price?
How to Close Deals without Lowering Price
Most salespeople ask the question, “How do I close deals without using price as an incentive, or how do I avoid dropping my prices?” A better question to ask, though, is how should you use price strategically in the sales process?
There is a tendency to look at pricing in the sales process in black and white terms--prices are either too high or too low. But I believe that price plays a key role in your overall strategy, which includes doing the right thing for your customer, being fair to your company, hitting your quota, and protecting your income. Each time you engage in a deal, you need to consider your overall objective and how price will impact that objective.
Quick and Dirty Tips on Price
Tip #1: Price is a ticket that gets you in the game. If you want to play you need to have your ducks in a row early on with price. Many salespeople never make it to the negotiation phase because they get greedy early. Before you offer a price, you need to understand the competitive environment and learn as much as possible about your customer’s past experience and budget.
Tip #2: Most buyers in business-to-business situations and high-end consumer sales do not purchase on price alone. If you want proof of this fact, just look around at your peers. Do you see all of those salespeople? They wouldn’t be there if price was the only thing that determined buyers’ decisions. People buy from salespeople who solve their problems. When you solve problems, what you’ll hear in the negotiation phase is, “We’d really like to do business with you but. . . " They are telling you that you’ve won, and that “but” is usually a price issue you will need to deal with to get the deal done. If you are losing deals without hearing this phrase (or some variation of this phrase) you are not doing a good job of uncovering and solving problems. Trust me, a low price won’t fix this for you.
Tip #3: Don’t listen to people who tell you that price is not important. That is pure B.S. Price matters; do not delude yourself into thinking otherwise. Each buyer will have their own sensitivity and emotions around price. That is really the most important lesson on price--it is about emotion, not logic, for both you and the buyer. Your skill at connecting with your buyer and uncovering those emotions will help you decide where and how to use price strategically in the sale. Your ability to manage your own emotions about price will help you ask for what you want.