Price Objection – A Misnomer
In the business context, a price objection is a challenge of value and a risk/reward analysis. Consider this.
What if you were trying to convince someone to buy something from you and you said,
“I have a deal for you. You see this money I have in my hand? It is $1,000. If you will hand me $1,000, I will immediately give it back to you along with the $1,000 in my hand . . . a 100% return.”
How do you think the buyer will respond?
Of course he will say yes.
Why? Because he has stopped thinking about cost and he is focusing on the low risk, high return of the proposition.
In fact, he is probably hoping you can do it again, or raise the amount of the investment. The “price” is long gone as a hurdle.
The exact same dynamics are in place in every sale. We set a price, the buyer sizes up the risk and the reward, and if he likes the deal he will close.
So why is it so hard?
Most of the time, we as sellers have not done a good enough job of shifting the buyer’s mind set, both intellectually and emotionally, to reducing his perception of risk and to concentrating on the potential reward (value).
A buyer says, “That is pretty expensive.” Now we are on the defensive and it is going to be much harder to shake that conviction than if we had set up the buyer with value in the first place.
I like to see the following questions and answers discussed before we get to price.
- What is the best outcome you would like to see from this relationship or transaction? Put another way, if we look back a year from now, what will we have achieved together that makes you VERY satisfied with the outcome?
- What will that outcome mean to you financially? (Set up reward)
- I am very confident that we can make that happen. We have been successful with others in your industry. For example . . .” (Reduces risk)
Now we have shifted the potential price objection into a much bigger risk/reward context with conviction which also reduces the perception of risk.
Often our products/services can generate a 5:1 or 10:1 risk reward scenario, and these are the metrics the buyer needs to fixate on, not the “1.”
This takes some prep work but once you get comfortable talking and presenting this way, you will start to have fun with it and actually welcome price objections as a sign of interest that the buyer cares enough to ask.