Truth: Customers buy based on their perception of the cost
The price objection is the most common and most frequent objection salespeople hear. You only need to stay in sales for a short time before you will find yourself encountering this issue. Yet the price is rarely the real objection. What the customer is thinking about is the cost of the product or service, not the price. If the salesperson offers no other qualification other than price, the customer raises the price objection. When the salesperson gives a quantified cost justification, there is usually no more discussion about price.
So how do you sell around the price objection? The best way is to avoid it because once it rears its ugly head there is a lot of work to do. It is easier - though not simpler - to avoid the price objection than it is to overcome it. Most salespeople were raised to address the "inevitable" price objection; let's see if there are some ways you can avoid it all together.
Step One: What is the customer buying? Here is a hint: 1) they are not buying your product or service and, 2) no matter how well you know them you do not know their current buying criteria. They are usually buying a solution to a problem or they are buying a means to achieve an objective. So begin the sales call by asking about the customer's objectives and problems. This is known as a needs analysis and it does just what it implies: it allows you and the customer to analyze their current needs. It is not uncommon during the needs analysis for the customer to say something like, "I had not thought of it that way." Which means, the analysis is causing them to see their business differently. Their criteria may change. Don't assume you know what they are buying - ask them.
Step Two: Quantify. As the customer talks about the problem, ask for details. You will need some hard numbers, so ask for the details. When the customer says that their productivity is down, ask them how much it's down and what that is costing them. Remember to use the "and what else" approach. Before long, you will have a greater understanding of the cost of the customer's issue and, therefore, the value of your solution.
If your $1000 product will solve the customer's $10,000 problem, what is the cost of your solution? It's free! The customer will actually make money by using your product.
Without the needs analysis, the customer might ask your price, you say $1000 and the customer would say, "Your price is too high." There is the price objection. To overcome it, you would need to back up the sales process and try to start a needs analysis. We've all been there - it usually doesn't work because now the customer is only thinking about the price.
With a quantified needs analysis in hand, you can change the conversation from one of "price" to one that focuses on "cost".
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