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“But Your Price Is Too High”

by David Brock on April 1st, 2013

It’s the customer’s moral and business obligation to always challenge you with, “But Your Price Is Too High.”  This isn’t a problem or issue.

What is the problem, is the mindless response from sales people, immediately offering a lower price.  Or even worse, anticipating the objection, discounting in advance–it doesn’t preempt the objection, it just means you have to discount further.

For an objection that happens in every single sale, you would think sales people would be so much better at handling it, but the most common response is a discount, without any understanding of what’s needed or why or why you should even discount.

Before I go further, I’m not naïve.  I’m not saying we won’t have to adjust our pricing.  All I’m arguing is that we and the customer must establish a sound basis for evaluating the pricing vis a vis the value of the solution to them.  Without this, it’s impossible to know what’s reasonable and what’s not.

When the customer say, “Your price is too high,”  the first thing we need to do is understand the basis for the statement.  Why do they think the prices is too high?  Are they just saying it because they are obligated to saying it?  Are they comparing your pricing to competition?  Are they comparing your pricing to something else?  To make that statement, the customer must have a basis for it.  Our job is to probe and understand that basis.

Until we understand why they make that statement, we have no basis for any discussion about pricing.  We also have no basis for negotiating, if and when we ever get to that point.

“We’re not used to paying that price!”  So what, this is meaningless when positioned against the return they get from the solution!  If we have a powerful business case, what business executives want to get is an outstanding return with low risk.  Sure they want the best price, but now we discuss the price in terms of the ROI.

“Your competition is cheaper!”  So what!  If we accept this, then we are saying our value is no greater than our competitors and we have no differentiation.  What you are saying to the customer is, “You’re right, we’re no different than the alternatives!”  Get real, we’re sales people!  Our obligation is to understand what our customers value then to create and communicate relevant, impactful, differentiated value to the customer.  Our job is to create a business case that demonstrates that value in a compelling way.  If we aren’t doing this, then we aren’t doing our jobs.

But the competition says “Me too!”  They ride your coattails saying they can do the same.  They also have some cool wizbangs that further differentiate them from you.  Don’t allow them to do that!  Don’t let your customer allow them to do that!  Your customer is doing themselves a disservice if they don’t force each vendor to develop clear and differentiated value propositions and business cases.  Make sure they understand this!

The customer must have a clear basis for making a choice, we have to give that to them, we have to make sure they demand that from everyone they are considering. Don’t let anyone take the easy way out by saying, “They are all the same, it’s just a matter of pricing.”  The alternatives are never the same—even in commoditized products.  Risk, vendor stability, vendor confidence, relationships, vendor reliability, quality, and the list goes on.  Nothing is ever the same.

Most of all, the differentiator is you!  What you do, the insight you bring to the customer, the work you do in facilitating their buying process, the relationship you  have are all important differentiators.

Sure your price may be too high.  Sure you may have to negotiate.  But force yourselves and your customers to do this in a context that is meaningful and based on value delivery.  Never let it be arbitrary, never defeat yourself by failing to position your pricing in the context of value to the customer.  That’s what professional selling is about.

This post was written as part of the IBM for Midsize Business program, which provides midsize businesses with the tools, expertise and solutions they need to become engines of a smarter planet. I’ve been compensated to contribute to this program, but the opinions expressed in this post are my own and don’t necessarily represent IBM’s positions, strategies or opinions.

IBM

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25 Comments
  1. The question here is Who is selling Whom? The salesperson is the one who is supposed to be doing the selling, but all too often it’s the prospect/customer who is selling the salesperson on lowering the price. Let me suggest you don’t allow that to happen. Let me suggest you start challenging your prospects/customers when they begin trying to sell you on lowering the price.

    • Bob, one of the things that sales people overlook is that procurement professionals are perhaps better trained at this process than sales people are. It’s their job to seize control, isolate issues, and get the best price for the value they want. But we don’t understand their process, or prepare ourselves to work with them. Instead we tend to react like deer in the headlights. If we really understand our customers, align with them, we actually convert the discussion into a collaborative conversation. Will we have to reduce our price? Possibly, but we have a clearly understood and mutually agreed upon context. And we will probably have closed at a higher price and margin than we would have done otherwise.

  2. David – There might be number of reasons customer might say those words. He could be genuinely comparing the price and value of your product to alternatives or he might be using it as a negotiation tactic. In any case it is up to the sales person to dig deeper into it by asking relevant questions. At the same time he needs to be careful not to get sucked into comparison with alternatives. As a sales person you need to establish a business case for your price and show the value it provides for the given price.

    • Great comment Harry. We need to position price in the context of what the customer values and the alternatives. Too often, the sales person doesn’t do this and doesn’t keep refocusing the customer on this context. The discussion becomes purely about price and everything else is abandoned and forgotten. As you highlight, it’s the sales person’s responsibility to keep all the discussions on context.

  3. Hi David,
    It’s usually a bad idea to compete on price and it may be a sign that the customer isn’t really seeing the value in your product. Assuming the product or service is a good one, that probably has to do with how the value is being communicated.

    • Heather, great comment. We have to always position the context of the discussion, aligned with what the customer perceives and values. Absent that, we and the customer have no basis for positioning price.

  4. Rather than apologize for my prices, I’d rather brag about them:

    “Are my price high? Absolutely. And why do I charge so much? Because I can. Because my clients aren’t just willing, they’re happy to pay those kind of rates for the results I generate. Can you find someone else to do the job for less? Absolutely. I’ll give you phone numbers. Why do they charge less? I have no idea. I don’t know a lot of companies that charge less if they could charge more but maybe they’re humanitarians.”

    Or maybe, the implication may be (because you never have to denigrate the competition), maybe they charge less because that’s what their clients are willing to pay for the results they generate.

    -Barry Maher
    Author, “No Lie: Truth Is the Ultimate Sales Tool”

    • Thanks for the comment Barry. The reason people are willing to pay higher prices is because they view the price as being fair for the value they want and believe can be delivered. There has to be absolute alignment between value sought, value perceive, risk, etc and price. If there isn’t, then there is no sale and this is the result of sales error.

  5. Tim Kirstein permalink

    Hello David,

    This is a great article and I loved it. You basically underscore the primary role of sales, which is to sell for the highest price. But many sales people lack the true understanding of how to do that and your article nails it… understand your value.

    Along with the role of sales is the role of marketing. It may not make sense for each sales person in a large organization to do all of the work required to truly understand how to negotiate price with customers, but it definitely makes sense for a product marketing person, who supports many sales people, to do the work and distribute this information to the sales force. In fact, it is his obligation and sales people should demand it.

    I also enjoyed your recent article on being “too salesy.” Sales people have an important role, which is valuable to both sides if done right.

    • Tim, thanks for the very kind compliment and expanding the conversation. You are absolutely right, it’s not just up to the sales person. They must be equipped, trained, supported, etc, by the rest of the organization. Not only in providing the information and data to present and defend value, but to actually deliver the value committed. If we cannot deliver value committed, our value proposition is just empty promises.

  6. I remember sitting in workshops with sales colleagues, product marketers and trainers learning skills and techniques to help us anticipate and nullify “price too high” objections.

    Question: Why do customers say “Your price is too high”?
    Answer: The customer may get something for nothing. It’s easy and it’s entertaining.

    That is why this objection must be expected and surgically extracted by the sales rep.
    Surgery requires education, training and practice.

    “Price is too high” is actually a canary-in-the-mine.
    Are we properly training sales people in the competencies that they need?
    In your opinion, who is responsible for sales training?

    • Vince, thanks for the comment. I don’t believe it’s solely an issue of sales training, but reaches deeply into the company in terms of the value we create and deliver, as well as our abilities to truly align with what the customer needs.

  7. Hi David,

    Excellent article and I look forward to following more of the articles you write. I sure would love to have a link posted that shows where the podcast of that interview you mentioned in LinkedIn.. 😉

    Someday sales representatives will wake up and find that the technology, economy and invested moneys spent, left the rest of the world with no other alternative but to get SMART about their buying habits.

    Right now I’m enjoying the fact that my competition doesn’t see that, but long term if hurts the sales profession as a whole. No more quick sale schemes, trainers claiming 200% gain with 20% effort, and no more books written by an author with less than 3 years in sales, who just so happens to know how to collect data and supposedly became an expert overnight! 🙂

    It’s time for REAL sales professionals to have an intervention with our peers… 🙂 Get Real or Get Out! 🙂 Sorry, political correctness was never one of my strong suits.. 🙂

    • Chris, I’ve really enjoye our LinkedIn discussion. It’s a real pleasure to see you participating here. You’ve absolutely nailed the issue. Those sales professionals that have broken this code will always be the top performers, the others will just blame those “stupid customers, bad products, company policies,” etc.

      The podcast is here: http://partnersinexcellenceblog.com/pie-tv-podcasts-and-materials/partners-in-excellence-radio-and-podcasts/. It’s episode 1, the Yin/Yang of Selling.

      Based on our discussions, I’m looking forward to your active participation here. You will add so much to the discussion. Regards, Dave

      • David I’m humbled. Your site here let’s me know I have an incredible challenge ahead of me to even begin to touch the quality of information you’ve shared on this great blog.

        I look forward to the discussions here as well. I’m always gravitating to where the smart people are, hoping it’ll rub off… 😉

        have a wonderful weekend and I’m sure you’ll see me posting here.. 🙂

  8. Great post David.

    My favorite quote “Your customer is doing themselves a disservice if they don’t force each vendor to develop clear and differentiated value propositions and business cases.”

    You hit all the right points. With 100% accuracy even customer will say price is a problem. Everyone is out to get the best deal possible. It’s our job, as sales people, to clearly explain that they get what they pay for. There is a reason we are more then XYZ company down the street. Thanks for teh post.

    • Thank you very much Johnny! I really appreciate your comments. Like your blog as well! Keep it up! Regards, Dave

  9. Rich Salt permalink

    Sales 101! My products don’t have a price because I don’t sell products! I don’t even talk products, I talk Business! Listen to the customer, sell them the concept, and they will tell you the value! Match your Investment to the Value! Why oh Why do we make this so hard? Be nice to see you again soon Bruce!

    • Rich, thanks for the great comment. Buying and selling is hard enough. We don’t need to make it harder.

  10. Pete Curtis permalink

    My sales are nearly always direct to the consumer, usually a homeowner or small business person.
    When I introduce myself for the first time, I do so knowung that I have what this person is looking for, and I am the best source he or she will ever find.
    Then, I begin dealing with every common objection as I take each step of the presentation, eliminating them as I go.
    At the core of it all is the building of trust and value in the mind of the prospect.
    Price does come up, but I have not lost a sale because of it – and I have not lowered my price by one cent. Value and trust are the keys.

    • Outstanding comment Pete! I can’t add any more–it’s so simple and obvious. The issue is, why do so few sales people do this?

  11. good point David.
    Discount consideration should be determined early by determining what expected price point a customer expects to pay and has approved budget for.

    All to often do I see situations where the sales process has come to the end, its time to ask for the order then the salesman drops his pant on proice to get it signed there and then. This often comes through pressure from hhigher up such as the sales mangager wanting to close it as end this month / quarter so 25 points goes down the drain when it could have been across the line at a better profit margin the month after.

    Saying that it must be signed as forecast and not a rolling forecast.

    Tony

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