Recently, a CEO of a smallish company - a man familiar with my books - called me to do some work. Given the difficult market, he wanted to use Buying Facilitation® to differentiate from his competition, and have his existing customers buy more product.
As with everyone, I led him down the buying decision funnel and he figured out 1. how he needed to go about getting buy-in from his managers; 2. how he'd know before we started that he'd have a good chance of getting the results he desired; 3. how he'd recognize the value of any money expenditure.
Through the questions, he realized the managers who would have to be involved with the decisions to bring me in, what he and I would need to do prior to any training to give him the best shot at success, and what he'd walk away with when we were done.
The next day, I had a conference call with two of the senior managers, and they bought in to my program. My prospect then moved forward, and together we designed a program to suit his needs. Then he asked for price. I gave him a price that I thought was fair - the price I was willing to do the work for, for his size company. But in this economy, it was more than he had available in his budget. He asked if I could come down in price. I guess you could call it a price objection.
I thought for a moment, and realized that the price I gave him was the price I felt comfortable with for the use of my time and IP.
"I can understand your problem," I said. "Why don't we just take the last coaching piece out, and that will match your price."
He was silent. "What do you mean? You mean take out the last 8 weeks of coaching?"
"Yes. That's a lot of work for me, and I love getting paid for the work I do. I think that's a win-win: you'll save some money, and I'll save some time."
Silence. "Let me think about this and get back to you."
I thought about the situation that night and sent him an email, saying I'd come up with a great idea. He could go with the lower price, and we'd put a rider in the contract stating that his folks could call me whenever they wanted coaching, and I would bill him for just the hours used, rather than have a full-time retainer. It was a perfect solution: I would get paid for my time, and he wouldn't have to be out of pocket up front, and possibly his folks would use less hours than the initial amount, thereby saving him money. No price objection, and no unpaid work.
He said, "I'll get back to you. I'm going to the bank to see how much I can borrow."
Next day he called: "We're good to go. Let's write up the contract."
"How much should I bill you for?"
"The whole amount."
"But I gave you a creative way to spend less and still have a win-win," I said.
"I know. But I want the whole thing. I want everything you've got. And I'm going to pay for it."
Next time you hear your prospects give you price objections, it's not because of the price. The give price objections because they don't know the full value proposition that they'd be paying for. And it's not based on their need, or your features and functions. It's based on the buying criteria they want to meet internally.
At the end of the day, buyers buy using their own buying patterns, based on their buying criteria. Help them figure out how to decide that you will offer them the value they seek; it may be different from the need they are trying to resolve.
When you enter the buying decision process and start with understanding needs and placing product, before the buyer has figured out how to recognize all of his/her buying criteria and before they have actually bought-into change, the buyer hasn't determined what you are worth to them yet.
When you name a price too early, they only know to compare it with other similar solutions - not against your intrinsic value. So price objections have much more to do with buyers not understanding how to evaluate their own criteria, and little to do with your worth or price.
Help buyers figure out how their criteria match your value. And then name your price. They'll go to the bank and get the funds.
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