How to Overcome Price Sensitivity in Sales — Top Expert Tips

BY Rachel Cagle
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Have you ever named the price of your product or service and had a prospect shut down the sale immediately? According to Lestraundra Alfred, writing for HubSpot, this could be because of price sensitivity.

What is Price Sensitivity?

Alfred says that it “measures how much demand fluctuates when the price of a product or service changes. Essentially, it determines how easily your customers are swayed from buying your product if you increase your prices.” But it’s not just when your prices increase. It depends on what the prospect sees as the norm when it comes to the price of what you’re selling, as well as a few other factors.

Influencing Factors

Your Competition

Chances are, you’re in a highly competitive industry. You go toe-​to-​toe with your competitors on a regular basis. Your competitors may also have a lower asking price than you. If your competition has already approached your price-​sensitive prospect, they may be focusing on your competition’s price. 

When a product can be directly substituted for another brand without impacting quality or ease of use, customers may be willing to go with the cheapest product because they know they are likely to achieve the same result,” says Alfred.

There are ways to overcome this obstacle. You need to clearly be able to differentiate both your product/​service and yourself from your competition. If you can prove that you provide more value to the customer than your competition, the prospect will likely choose to do business with you, regardless of cost.

Perceived Value on Price Sensitivity Analysis

How dire is the prospect’s need for the solution you can provide? What about timing? How long do they feel they have to fix their problem without negatively affecting their income or operations? Identifying your prospect’s problems, pain points, and deadlines is the beginning of establishing your product’s value

To further combat potential consumer price sensitivity, you need to ensure that the prospect understands the value of your product. If you have tailored your sales presentation to the prospect and included evidence and examples of how a business relationship with you can benefit them, the perceived value of your product will be so high that the price won’t matter as much.

The Cost of Switching to Your Offering

Sometimes it isn’t your asking price that causes price sensitivity. Switching from one product or service provider to another can be a costly endeavor for your prospects. “For example,” says Alfred, “when purchasing from a SaaS company, B2B buyers need to factor financial onboarding costs associated with using a new piece of software into their budget during the decision-​making process. They also need to consider the time and resources they need to spend preparing their team to use a new piece of software and how that can impact their productivity and bottom line.”

Final Thoughts

If the cost of switching to another product or service is significant enough, prospects will be more resistant to change. Unless you can provide them with evidence of a significant positive shift in ROI, you may have trouble overcoming this particular case of price sensitivity.