30% of salespeople say that their price being “too high” is the top objection they hear from buyers, according to SalesFuel’s Voice of the Sales Rep study. It’s no surprise that pricing negotiation skills are an important skill set to have in sales. But, not every tactic resonates with all buyers, and gone are the days of a one-size-fits-all approach to price objections.
Pricing negotiation must take buyer types into consideration
No longer will general negotiation strategies be effective for most buyers. Instead, to be successful, buyers must adapt their approach based on the type of buyer they’re working with.
Samer Fancy writes about this topic for LinkedIn, and he highlights a few different types of buyers that you may encounter. And understanding the difference between these types is key. “Price objections from each type [are] driven by the different motivations of these different types of buyers, and you need [a] different policy/strategy for each one,” he explains.
As you might have guessed, this type of buyer is most concerned with the value that your solution will bring. Likely, you will encounter this type often, as today’s buyers increasingly focus on value when making buying decisions. Simon Calvert shares with Customer Think that their research “shows that brands who offer personal value to their buyers are more likely to see improved commercial outcomes – translating to a 16% shorter sales cycle.”
And even though value is important, typically, Fancy explains, this type will still try to bring the price down. This is where pricing negotiations must focus on the specific and personalized value that your solution offers.
“The strategy that salespeople need to deal with value buyers is to empower their position to make trade-offs, while at the same time offering a defense against pressure on price alone,” he writes. “By using the trade-offs strategy, you will know what value the buyers see in your product/service. By listening to how they respond to the trade-offs, you can measure if the problem is that you are offering too much or that you are uncompetitive for the same things.”
For tips on how to uncover what is most valuable to a prospect, ask these essential questions.
The price-driven buyer
These types of prospects have a specific set of specifications when it comes to a vendor, but they also have a set cost they want to pay. Whoever can deliver on both may just win their business. But savvy sellers can compete if they adjust their pricing negotiation strategy accordingly.
But first, they must avoid a common mistake reps make with these buyers. As Fancy points out, “A common mistake with dealing with price buyers is the attempt to make them into value buyers by offering a promotional price. The argument is that by giving a proven price buyer more quality or service than they have paid for, particularly when the users could really benefit from it, these customers will see what they have been missing and be willing to pay more in the future.”
This, unfortunately, isn’t what ends up happening in most cases. Sellers who try this tactic actually incentivize receiving benefits for a low cost. The customer realizes that they can score this level of service and benefits at a low cost; why would they agree to pay more down the road?
Instead, Fancy suggests removing any “extras” that you can while still meeting the prospect’s desired specifications, and if possible, close to their requested price.
Then, he adds, “let the price buyer know that you can deliver a much higher level of quality and service. When the price buyer needs a better service…offer the service but only at the higher price.”
Be prepared and don’t devalue your solution
As SalesFuel points out, “No matter how much value your product or service will bring, there’s a good chance prospects will want to negotiate on price.” The inevitably of pricing negotiation offers the opportunity to do your research on the prospect, their business and their buyer type.
And remember, as you enter negotiations, don’t devalue what you bring to the table. Don’t lose confidence in yourself or your solution.
For advice on polishing your overall negotiation skills, take a look at these pro tips.
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