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When the Price Isn’t Right: How to Respond to Bargain Buyers
By Vickie Sullivan, Contributing Editor
When the market tightens, bargain shoppers come out strong, and it seems that every prospect wants a discount from you. It’s tempting to relent, just to get the deal done.
How do you respond when someone doesn’t want to pay your price? Your reaction depends on three things: your motivation, your ego and your brand.
1. Reacting to Their Reaction
The sales conversation is going well – you want to work with this prospect and they are excited about you too. Then comes the “money question”: They ask how much and you tell them. And they go into shock.
What happens next depends on the motivation behind your pricing strategy.
Worried about leaving too much money on the table? Then you assume that you’ve over-reached and start scrambling back. Concerned about your sales pipeline? Then you’ll discount as if your business depended on it.
Neither of these scenarios have anything to do with the client – it’s all about your confidence in your pricing strategy.
Instead of offering an immediate discount, interpret their reaction as a springboard to learn more. My favorite approach: the “I’m just curious” response. It goes something like this: “Gee, it sounds like this range was more than you were expecting. That happens to me too – I usually have a figure in my head when I’m looking for solutions. I’m just curious: what were you thinking it would take to get (enter result you just discussed here)?”
If the fee is too low, then you have an opportunity to educate. If their fee is in range with another option, explore that. If they say, “I don’t know,” then I suggest they think about getting a budget. Ignore any histrionics; either the prospect isn’t ready or it’s a negotiation ploy.
If you are secure about your prices, feedback from prospects won’t throw you and you don’t worry about leaving money on the table. And, if you do leave money on the table, not only have you learned a valuable lesson – that “right” price is one both parties agree to – but you’ve also made a mistake you won’t ever make again.
2. Winning the Battle, Losing the War
Personal growth gurus say perception is reality. And for many prospects, perception on price is based on comparisons. Therefore, sticker shock can occur when shoppers have visited the bargain basement firms first.
Most folks will justify their reaction by telling you what others are charging. When they do, it’s tempting to meet or beat that price to “take” the client from a competitor. Sometimes we estimate to win instead of pricing for profit. Our ego becomes bigger than our bank account.
Competition is a healthy thing – until we decide to beat our competitors at all costs. Conventional wisdom is to low-ball the entry price to gain client loyalty.
The reality: These clients will bolt at the first hint of price increase, making the marketing costs to get them profit-prohibitive. So why do we do it? Because in the heat of battle, it feels so good to win. Ask any auctioneer or e-bay power seller.
Instead of launching a price war, take the comparisons one step further to point out the differences. An effective approach is the “who you use depends on what you want” conversation.
When someone brings up another name, I’ll say something like “That company is so great at (enter what I don’t want to be good at.) If you are looking for that, they are your best bet. If you want (enter what I’m better at), then it’s worth the extra investment to get what you really need. You deserve that. And otherwise, why take a bigger risk than you have to?”
If they need what you have and can’t afford the high-ticket solutions, then go for a lower-cost option. Again, you are educating folks without diminishing your brand.
While it’s good to know what others are charging, don’t give bargain firms too much power. Keep your ear to the ground so you’re not surprised by the lower price points, and plot your defense ahead of time with comparisons and a variety of options. Your reaction will come off as calm, confident, and ready to walk away.
3. Negotiating for Fun and Profit
The recent RainToday.com Fees and Pricing Benchmark Report: Consulting Industry 2008 gave statistics on what we already surmised: well-branded firms can charge premium prices and discount less often.
Yet, there are always those negotiators that just have to ask. Your brand determines how much they will push for and how little you have to give up.
There are two kinds of negotiators: the “Hey, it doesn’t hurt to ask” folks who don’t want to miss an opportunity to pay less, and the “discount or die” prospects who don’t believe in paying full price for anything, period. The former will buy anyway if they want you bad enough, and the latter will walk away regardless of their desire if you don’t give up something.
Well-branded firms can afford to be magnanimous without giving away the store. When a negotiator asks for a discount, ask for something immediately. My favorite question: “If we can agree to a discount, will you decide right now and pay me in full, in advance?”
If not, they are either not ready to buy or want something for nothing. Stick to your price and prepare to walk away or offer another option. If they agree, then negotiate a discount. It’s a win-win.
Again, it’s all about perception. People do what they think they can get away with. And even if the chances are slim, it doesn’t hurt to ask.
A strong brand puts you in the power position. If prospects believe you are worth your premium price, they won’t expect a bargain-priced discount. They’ll be happy with a smaller discount and will see what you ask for as a fair trade.
Winning with Bargain Buyers
Everybody discounts. Yet, we gripe about it and do it anyway. When we keep our motivation clear, our ego in check, and our brand strong, we don’t backpedal when bargain shoppers approach us. Our response doesn’t depend on theirs. We can negotiate confidently. And when that happens, everybody wins.
Vickie Sullivan, President of Sullivan Speaker Services, Inc. is nationally recognized as the top market strategist for experts on the professional speaking circuit. Since 1987, she has worked with thousands of experts in a wide variety of industries to launch their big-fee speaking, professional service and book/product empires in highly lucrative markets. Contact Vickie by e-mailing firstname.lastname@example.org.