There have been a number of interesting blog posts and discussions going on about when it’s appropriate to talk about price. Most sales people tend to want to defer the pricing discussion until very late in the sales process. Some for good reason, some just out of habit–but with no real rationale at all.
To tell you the truth, I don’t know how to answer that question. I tend to defer the investment discussion until very late in the sales cycle. Since we sell consulting services, it’s impossible to know the price we will charge until we understand the scope of work, schedule, resources required and deliverables. I also tend to like to present our price–or the customer investment, when I also know the business justification and results the client will receive as a result of the services we provide.
If you are selling a product, however, generally you do know pricing–at least some price ranges. But many sales people dance around this issue, defering it as long as possible. Some, as my friend Anthony Iannarino presents, do this in order to better position value. (I tend to like that). But, some evade the issue just because that’s what sales people do, we want to string the customer along until we figure how to extract as much money as we possibly can.
However, it strikes me as ironic. One of the most important qualifying questions we have as sales people is, “Do you have a budget?” We spend a lot of time trying to assess the budget the customer has, whether they can afford our solution, or which solution we want to present to fit their budget. We want to learn how serious the customer ia about spending money. Sales people express great frustration about customers who can’t give them a clear indication of the budget.
Somehow it’s odd that we expect the customer to be able to share their budget and commitment to spend a certain amount of money, often without knowing what they will get from it. At the same time, we are unwilling or uncomfortable in sharing the pricing discussion.
Why is it that we can’t talk about pricing and investment until late in the sale cycle, yet we expect the customer to be able to identify and even commit to a budget very early in the cycle? Does this odd dance that we do with each other adversely impact our ability to really have a discussion about business value, need, and alternatives with the customer?
There are some, both on the customer and sales sides that are just playing games in the pricing-budget discussion. For the moment, let me set those people aside.
But for many customer the answer to the budget question is as elusive as the sales person’s answer to the pricing question. It seems the answer can only be “it depends.” Our pricing depends on the ultimate solution we offer the customer. We don’t know that solution until we have engaged our customers in discussions about what they are trying to achieve. Likewise, the customers’ budget depends on their investment and strategic priorities; and how well our solution aligns with those priorities.
There will be cases where despite how much value we create, the customer cannot make the investment–it is simply unaffordable or they have higher priorities for those funds. There will be cases where the customer had no budget or intend to spend, but upon discovery the opportunity and potential returns they might get from an investment, they will find the funding for the solution.
Understanding how the customer makes investment decisions, understanding if the customer is willing to consider investment decisions aligned with their strategic and investment priorities is important for us as sales people. From the customer point of view understanding the potential investments we may be asking them to make is critical. They need to understand whether they should make the time to meet with us. They need to begin setting expectations internally.
The investment discussion is really a discussion about business value. To often, both customers and sales people fail to recognize this. We keep the discussion focused on price and budget. In doing this, we have allowed the customer and ourselves to think–“Everything else is equal.” We have let ourselves and the customer commoditize our offering, discounting any potential differentiation.
It’s our responsibility as sales people to lead the conversation to focus on business value. It’s not the customer’s responsibility to do this.
I don’t know when it’s appropriate to present price. I don’t know when it’s appropriate to ask the customer’s budget. Somehow, it seems important from our very first contacts with the customer to be exploring business value and to do this constantly through the sales process.