Overcoming sales objections: Price vs. Cost
Successful salespeople know that there’s an art to bringing price into the sales conversation—they also understand the differences between price vs. cost and how to demonstrate value, to overcome even the toughest sales objections.
Why is it that someone would eagerly pay top price for a bottle of fine wine, but express outrage when fuel prices rise? It’s not a matter of means, nor is it a matter of need. In fact, arguably the consumer likely needs the fuel more than the wine. So, what’s the logic behind reasoning?
It all boils down to the considerations of price vs. cost in the mind of the consumer.
How buyers differentiate between price and cost
Price is objective. It’s the amount that a business owner assigns to a product or service. Considering what the price of something should be is based on several things that can include both the tangible (e.g., the cost of materials to make the product, what competitors are charging), as well as the intangible (your company’s brand, the extent to which consumers value what you have to offer).
Price is just the same for one customer as it would be for another. Cost, on the other hand, will vary by customer.
The distinction is why a woman will pay more for a dress she plans to wear to an evening dinner party than to work. Or why someone might pay significantly more for a pair of sunglasses that comes with a one-year replacement guarantee if they know they usually lose or damage 2-3 pairs of glasses a year. Or why parents would pay more for a hard-to-find toy that their darling child wants more than anything in the world.
Clearly, it’s important for salespeople to understand the distinction between price and cost. It’s also equally essential to understand how your prospect perceives cost in each sales situation, to avoid or overcome potential sales objections.
Bringing price into the sales conversation
In every sales conversation, the issue of price will emerge. Generally, it will emerge early on during the conversation and will be raised by the prospect: “How much for…” But, while potential customers are often eager to raise the issue of price, savvy salespeople prefer to hold off on that discussion until something else can be discussed—value.
There is, of course, a balance to be struck. Waiting too long to bring up the price may result in losing the prospect’s attention—or trying their patience. In addition, if your price is simply not affordable for the prospect you’ve wasted a lot of time on a situation that was never going to lead to success.
Research from Gong Labs tells us that most salespeople bring price into the conversation throughout their call with a prospect, but salespeople who are the most high-performing wait until 40-49 minutes into the conversation before bringing up the price. They will, of course, adjust the timing based on the signals they’re getting from the prospect. Still, the research is clear that introducing a price too soon isn’t the best approach to take to make a sale.
So, what should you be talking about instead of price? Cost.
Successful salespeople know they need to first understand the prospect’s needs and what they value:
- The need buyers have for your product or service
- How buyers will use your product
- What’s prompting the buyer to search for solutions
- What the expected (or desired) outcome is, should they purchase
Those considerations are all part of a planned process to lead the prospect to a buying decision.
Getting ready to talk price
You can’t avoid the price conversation, of course. It does need to be brought up at some point—hopefully, at the point where the prospect is already favorably disposed to what you have to offer and already thinking about the value it will provide.
Practice, as you would when making a presentation, when preparing to talk price with a prospect. When will you bring it up? What information will you seek first?
“If you know a prospect is cost-conscious or the competitors are considerably less expensive, then it’s important to discuss price early on, commented Alex Buckles, Sales Executive and CEO of Forecastable. “Sales reps who can identify pricing objections early in the sales cycle are better positioned to proactively address product value sooner rather than later, improving their likelihood of closing the deal.”
Plan to be straightforward and matter of fact with the price and, to the extent you can, try to avoid moving too quickly to talking about discounts or deals. Discounting can have value in some situations but keep in mind that discounting also has the tendency to diminish the perceived value of a brand, product, or service.
The price discussion is also important to get a sense of what the prospect can afford or what they are willing to pay. Again, you don’t want to invest a lot of time in a sales conversation that is destined to fall apart because your price is beyond the budget of the person you’re talking to— you cannot get what the buyer simply does not have.
Bringing cost into the conversation
As we’ve seen, price is a very straightforward part of the sales conversation. It’s fixed. It is what it is in most cases.
The cost part of the conversation, though, is far from fixed. For many salespeople, it is also their favorite part of the interaction because it provides an opportunity for creativity and strategy. It’s where the salesperson determines the point at which the customer will identify value and thus removes friction from cost considerations.
An effective way to move into the cost conversation is to explore other scenarios. If the prospect doesn’t buy what you have to offer, what will they do instead? And what will the cost of that other choice be? Taking a deep dive into the cost of the alternatives— including doing nothing or taking no action at all— can be a compelling way to put your price into perspective. Doing so can also help you avoid late-stage price objections.
Some questions to consider when bringing cost into the conversation:
- You’ve identified some challenges that this product could help alleviate. How would alleviating those challenges impact your company’s bottom line?
- Let’s think about what your world would look like six months down the road after you’ve made this purchase—how would this impact you?
- Now let’s think about what your world would look like six months down the road if you make a “no go” decision.
- What impact would purchasing this service have on your ability to compete in the current marketplace?
- What initiatives will you not be able to pursue if you don’t make this purchase?
- What is the value of implementing this service to your organization? Your department? You?
Prospects actually appreciate your efforts to help them explore and compare alternatives. Research from Qwilr’s Buyer Experience Study indicates buyers appreciate when sellers take the time to work with them and guide them in making a sound purchasing decision. In addition, 28% of the prospects you work with are looking for information that will help them determine clear ROI or return on investment. ROI represents what the prospect views as the return they will receive for the cost they pay.
Gathering specific numbers can help make ROI more tangible and help demonstrate value in your sales proposal. You can do this manually, but that can be somewhat tedious and subject to error. Instead, consider using an ROI calculator tool, which enables you to visualize the impact of your solution, accelerate the deal, and make your sales proposal more compelling. Qwilr is the only proposal software to offer an interactive and customizable ROI calculator; request a demo to see it live.
Sealing the deal
At this point in your sales conversation, you’re likely feeling pretty confident and comfortable with the prospect. You’ve engaged them in conversation and learned more about what they value, how they will use your product or service, and what cost means to them. You’ve listened actively to thoroughly understand your prospect’s needs, communicated the benefits of your solution, and visually demonstrated the value of what you have to offer— you’ve championed every sales objection they’ve thrown at you.
Now it’s time to seal the deal!
If you’ve dreaded or delayed the price conversation in the past, or lost deals from sales objections related to price, think differently about how to bring cost into the equation. You should never lose a deal because you’re not including value in the price discussion. Remember, price without the context of value, will always seem expensive to a buyer.
For more on how to visualize and demonstrate value in your sales proposals, we invite you to book a Qwilr demo.