Lately I’ve been asked to do a lot of work around price. I’ve been using this list of ways you can defend your price and capture your fair share of the value you create. These four ideas are worth millions of dollars in the right hands, and they are worthless in the hands of someone who isn’t willing to take action. So here’s your action plan for defending your price.
Preempt the Pricing Conversation: A lot of people wait until the end of their sales process to share their price. But the problem comes when their prospective client looks at their price and recognizes it is the highest quote they’ve received. If you have a higher price than your competitor’s, make that fact known as early as possible. Embrace it. If you are worth more, you can’t fear having a higher price, and that it is what it looks like when you avoid the conversation. Once you tell your client that you are going to cost more, you can focus your efforts on differentiating your solution, explaining how they are going to benefit from this greater investment, and explaining why they don’t want to invest less.
You say something that sounds like, “We are going to have a higher price than some of our competitors, so I want to explain to you why our price is higher and how paying a little bit more is going to help you produce better results. Can I share that with you now?”
Push Back with the Greater Value You Create: If you missed the opportunity to have a preemptive conversation that eliminates the price objection, then you have to push back on a request to lower your price with the value you create. You have to admit your price is higher and explain the greater value you create. You have to explain how reducing your price also reduces the value that you deliver (and it does).
You say something that sounds like, “Yes, our price is higher than some of our competitors. But that higher price allows us to invest in these things that ensure you produce the results that we discussed. Investing less than that means that you aren’t going to get those same results. Are those results still the right results for us to focus on, or should we be trying to build you a different solution?”
Justify the Higher Price: Many of your clients will pay a higher price, and they may even want to make a greater investment. But they need your help justifying that greater investment. If your business model is different and requires different investments, share that with your prospective client. Explain how those investments translate to the results you produce for them.
You say, “Our business model is different from our competitor’s. The difference in our price and some of our competitor’s prices is that we invest more here and here to deliver these two outcomes. Without those investments, we can’t produce the greater results in this area you said was critical.”
Increase the Risk: No one wants to pay more than they have to or more than they should. You have to help them understand why they have to pay the higher price to get what they want. One way to do that is by showing your client the risk of under-investing. If they pay less for your product, will it need to be replaced sooner? Will it cause performance issues? If you sell a service, what happens when they pay less? How is the service inferior and what does it cost them? Most of us sell solutions of some kind, and that means we make all kinds of different investments to produce different results for our clients. How does spending less hurt your client?
You say, “Without making the right investment here, you won’t be able to produce this outcome and you won’t be able to meet your strategic goals. Here’s why . . .
How do you talk about your price? Do you talk about the investment your client needs to make to produce results? Do you justify your higher price by explaining why it is necessary to delivering better results?
Go into the last couple weeks of this year with the strong belief that serving your clients means helping them make the investment that matches the results they need. I’ll see you back here next week!
P.S. If I can help you or your team in 2015, or if you need a speaker for your event, reach out to Beth Mastre. You can contact Beth directly by emailing her at email@example.com.