Talk About Money Early and Price Late

Price, Cost and Money

Price is usually the first question asked by the prospect, and needs to be the last answered by the sales rep. The sales guy should sell on cost and close on price.

If that doesn’t sound like a customer friendly strategy I’ll understand. Refusing to answer customer questions is never a good idea, and especially when it comes to what the cost will be. A sales guy who won’t talk about pricing will risk the customer losing trust.

On the other hand the customer is never going to be happy with the first price offered – that’s just an upper limit, a ceiling to whats s/he might need to pay. The sales process will offer lots of opportunity to get discounts.

So the challenge for the sales professional is satisfying the customer’s need for an indication of cost – the money – without finalising how much s/he’ll end up paying – the deal.

My mantra is we should never discuss pricing in detail until the customer is ready to sign. I’ll talk about money (as in cost appetite and budget) early and actual price right at the end.  I’ll sell on cost and close on price.

Our Challenge

Some buyers seem to have a natural talent for taking advantage of poor sales technique. Professional buyers are trained in a tactic they call Salami – it means “one slice at a time”. It describes the way the buyer will keep asking for more discount, or more services after the price has been set. Each request is for something quite insignificant but by the end of the process the seller will have conceded much more than would have been the case in a single negotiation.

In Always Be Prepared to Walk Away we looked at ways we could respond to customers who are just about to sign and can do the deal, if only they had a little bit more. These customers are in the Salami role, whether they know it or not. This can be very difficult for the seller when it seems the only response available is walking away from the deal, or at least threatening to. That’s not an attractive option for anybody. Better if we never get in this situation in the first place, but avoiding it requires us to have laid the proper groundwork, very early in the campaign.

A professional buyer will persuade us to declare early in the campaign, our terms – price, payment, services, guarantees – all the things it’s easy to include when we’re probably not going to get the deal. In fact the buyer may understate our qualifications for the project, just to make us declare our best price. When the buyer tells us at the first meeting we need to do something with our pricing if we’re to make the short list, he’s planning the Salami. We’re in for a hard time later. Whatever we quote at this point is going to be the maximum we’ll get. We’re likely to get a lot less.

Our Strategy

My preference is to get an indication of cost on the table very early in the sales process, and probably at the first sales call. For example:

“We obviously won’t be able to give you a fixed price until the requirements, and all the alternative options, have been fully considered. However, our customers in similar situations have paid between $10,000 and $20,000″.

• “We will offer an acceptable price, when we understand the bounds of the requirement.”
• “We won’t lose the business on price alone”
• “But we won’t commit to our best price until you are ready to sign a contract.”

How We Win This Way

The benefits of this strategy are plenty, but the main wins are:

1. We satisfy the customer’s need for pricing right up front.
2. We get to include that cost in our qualification and retire gracefully if our range is outside the buyers expectations.
3. We let the customer know the most important aspect to us is getting the requirement 100% right.
4. We let the customer know we’re flexible people s/he can do business with.

Now we can use any flexibility in pricing to close the deal, maybe with the conditional close. Once the issue of price has been put on ice we can get on with winning the prospects trust, after which the actual negotiation will be much simpler. The emotional decision will have already been made.

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Tagged as: Business, close processing, closer, Competition, cost, customers, Marketing, Price, price offer, Pricing, processes, Sales, Sales process, sales rep, sell