How to handle price objections
When someone tells you your product is too expensive, it's not always about the price. A classic sales mantra is that if a prospect gives you the price is too high objection, you simply haven't communicated enough value. But oftentimes it's about something else altogether—and they simply use pricing as an easy way out.
Here's how to handle price objections effectively in any sales scenario, uncover the real reason for the price objection, and overcome it effectively.
Here are the 7 most common reasons why prospects say the price is too high
- They don't have enough money.
- They have the money, but don't want to pay your price. They want to get a discount.
- They might not be interested generally, but don't want to say that.
- They might not like your product.
- They might not like your company.
- They might not like you.
- They might not be looking to buy a product like yours.
Basically every sales objection can be hidden behind the price objection.
It's your responsibility as a salesperson to find out what the real issue is. To solve their problem, you must first know what it is.
How do you do that? You ask questions
- "Are you trying to get the best possible deal?"
- "Do you have budget constraints?"
- "Is this not the right time?"
- "Are there other reasons, honestly?"
Don't just take their answers for granted—read between the lines. If you have a feeling that they're not forthright and upfront, eventually you have to call them out:
"You know what, I have a feeling there's something else. Is there something deeper than that? Do you really love the product?"
If they insist it's about price, you can ask them:
You: "At which price would you buy?"
You: "If I could offer you this product at $1,500, would we have a deal? Would you buy right away?"
Prospect: "Yes, I'd buy right away." (Now you know it's really price)
OR Prospect: "Well, we'd then look into your safety features ..."
That's what I refer to as the virtual close. You essentially simulate the process that you need to go through with the process to arrive at a buying decision. This way, you can identify any red flags and deal breakers in advance, and pre-empt unforeseen surprises.
How do you handle the price objection when it's actually about the price?
When a prospect gives you the price is too high objection because they actually want or need a discount to buy, one of the best ways to handle it is to actually just postpone the negotiation, and just ask them to take the next step anyway.
I've shared this in detail in how to respond to discount requests.
Here's another piece of advice to heed: if you never receive the it's too expensive objection from prospective customers, then it's pretty sure that your price is too low, and you should consider raising prices. In fact, for SaaS startups, I often recommend that as a baseline, you should be losing about 20% of prospective customers because of the pricing objection.
Focus on ROI, not price
Sometimes your product might indeed come with a price tag. Encourage your prospect to not just look at the sticker price, but instead ask them to focus on the value your solution can provide for them.
If the prospect actually should become a customer, it shouldn't be that hard to help the prospect realize that the money they invest into buying your solution will eventually generate a much bigger return (and that it would almost be foolish not to buy).
Ask them how much it's worth to them
Just ask them: "How much would you be willing to spend?" This will shift the dynamic from them just objecting your price to you them actually committing to a price point. Now of course, they might still be bluffing, it could still be part of their negotiation strategy, they might just try to lowball you and see how you respond—but at least this puts the ball in their corner.
Ask them how much it would cost them to not buy
When they buy your product, they'll have to pay the price you agree upon. But not making a buying decision also has a price.
Postponing to adopt a better solution comes with a cost. Let's take the case of our sales CRM—if we can demonstrate to a prospect that adopting our sales platform would help them generate $15k more in revenue per month than their sales team is generating with their current solution, every month where they stay on their old solution is essentially costing them $15k.
In our guide to sales negotiation, you get much more advice on not just price objection handling, but also many other aspects of negotiating and closing sales deals.