Don't Overcome Price Objections . . . Eliminate Them

The Greater Baltimore Committee released a statement that they were pleased by city council’s support for the Port Covington Project, a redevelopment plan for the waterfront that will create offices, homes, shopping, restaurants, parks and a new campus for Under Armour. In the statement, it’s noted that the negotiations experienced difficulties.  While I don’t have any inside information on the discussions, you can bet that the $535 million price tag for tax-increment financing was at the center of the negotiations. While this is a large project and price negotiations take on a whole new scale, it’s a common occurrence when selling any product or service.

So how are objections on price handled?  There are two prevalent reactions:

• Scale back on the solution.
  Reworking the solution in an attempt to bring the total cost closer to the prospect’s number might succeed in narrowing or closing the gap between the prospect’s expectation and the originally proposed cost, but will likely create a credibility gap.If the scaled-back solution does meet all of the prospect’s needs, then the prospect is likely to view the first solution as excessive . . . and overpriced.  However, if the first solution was indeed the best fit, then the second solution will be viewed as inadequate.
• Cut the price. 
  Attempting to “rework” the price is typically done by reviewing the services to justify the cost, trying to persuade the prospect into increasing their budget, and then dropping the price to meet in the middle.  While this tactic can work, it casts doubt on integrity and encourages further stalls and objections to create more concessions. 

A better avenue is to try to establish the budget before it becomes an objection. You don’t necessarily need to establish an exact number but having some sense for what the prospect is expecting will let you formulate a solution within that scope. If the prospect can’t provide an estimated budget then it’s best to give a price range you’d anticipate the solution falling within to gauge the prospect’s comfort level with an investment of that size.

In this way the prospect is alerted to a price range therefore limiting objection later on because it provides some general price guidelines to steer potential solutions.  Alternatively, you’ll know early if money is a problem and can explore financing options or eliminate the opportunity before spending time with a prospect that can’t pay for your product or service.  Either option eliminates wasted time and effort struggling through price objections.