How do I respond to a question about price too early?
What's the best way to respond when someone asks for the price of your product before you have had a chance to do adequate discovery and needs analysis? We sell technology products, and often come across those during our marketing efforts who just want the price, without a conversation about their needs and if the products are a fit first. Any suggestion as to how to respond to this type of question to move the sale forward, without giving away too much too early?
It so happens that I attended a presentation last week from a SalesForce Exec last week and he answered this very question this way. He said, essentially, that you should emphasize the fact that the 'customer/service provider' dualism should approached as an equitable exchange, NOT a dynamic in which one side "receives/is sold to" while the other side begs, cajoles, etc. Instead, with a proper understanding that each party has limited time, valuable things to attend to and, potentially, something to be gained from the conversation, the proper approach to this situation is to respond thusly:
"I can give you a ball-park, but I don't even know if you are a fit for our product/service. If I can ask just a few questions, then I can determine if its even worth our time to continue the discussion. I know your busy and I'm certainly busy, so I don't want to waste our time. If, after asking you these few questions, I promise, I'll have a more accurate estimate of what pricing might be, if you were interested. How does that sound?"
I think this properly frames the conversation as a mutually agreed upon engagement between two time/resource constrained parties who may each have something to gain from the conversation.
If, I am not mistaken there are sites that post a general ballpark on what the going rates are for certain services. This is gives you a general comparative analysis based on your needs and those of the clients.
Give them the price and immediately show them the cost-benefit to their area of expertise. There's no shame in how much your product costs - but plenty of ignorance in how your product synergises with their business practices and company culture. Go that step ahead and prove your product pays for itself upon certain criteria in both tangible and indirect ways, even to the community they originate from or to related industries in their circle of influence.
Offer an estimate based on what ever information is available, using your underlying assumptions as a segue for further discussing the opportunity.
Well this question is really driven more by the market segment and demographics of your product and services. Typically if the price point is $1,500 and below and it is a B2C oriented market segment you will be competing more on price. If you are competting in B2B market segment, then the main challenge is whether you are competting with a product or service that is a technology vs a science. In the technology space you are generally up against many vendors. The outcome in that case, will depend of percentage of market segment is controlled by a few versus many. If it is highly disperse, you have less price flexibliity. Now if your product or service is a science and/or has strong patent protection (e.g., pharmaceutials, aerospace, etc.) you get to charge what the market will bare. So you really have to know your primary market segment. That will enable you to take the high ground on pricing.
Agree with most of the others here that it's helpful to give a ballpark. From the buyer's perspective, we all want to know if a solution can possibly work. Something we often overlook from the seller's perspective, is how useful it is to not waste a ton of time on someone who will never, ever buy.
I like to offer a range, starting with the smallest/cheapest solution, suggesting that companies like them often spend X, or even Y, depending on what they need. You don't want to just leave the lowest number out there all alone-- that will anchor them to that price-- and could actually lose you the deal if it sounds too cheap. (Happens more than you might think.)
Always be prepared to address this comfortably, in a way that puts the prospect at ease and doesn't sound defensive. If you refuse to give any price upfront, have something like "I know no one wants to waste time on something that might not be a fit. If you can give me 10 minutes, I can give you some options." Personally, I think this is too defensive, but for folks who never give pricing info until the end of the discovery, it's a way to get there faster. ;-)
i think you have some great responses below. I hope I provide some originality here: There are 3 parts of working with a Customer: Relationship, Roadmap to Revenue, Customer Success. You can choose to not answer, or you can provide a Range, and then get them focused on the total nature of the relationship. As others have said, price is always an Issue, but it is about the Value you bring to the Customer that will determine how soon you provide this information. Happy to provide specific ideas if asked.
Before I can give you a guide price let me ask you three very quick questions...
Give a range or at least what the starting point would be if you cant give a range. That is what I in my business when it comes to SEO.
1.) Marketing qualified leads should be designed to give sales people some insight on the issues the prospective client is looking to resolve through the use of your products. This way you are not going in blind.
2.) If you are being asked about price, the best you can do is to give the prospect a ballpark range with the caveat that it is dependent on the correct product for their application.
3.) If they are asking price early that is a tell that price is a huge issue for that prospect. So your solution and/or proposal has to explain how your product can impact them not only through the purchase but down the line in total cost of ownership (TCO).
All too often companies are worried on the initial cost of a solution because of cash flow issues, but they rarely look at the TCO and how that can impact their bottom line.
If your solutions do provide a lower TCO the ask also offers you an opportunity to explain and/or present a case study on how your solution does provide a TCO. It also gives you an opening to identify what's most important to the prospect.
I'm a newcomer to this forum and found the answers posted very interesting. I'd offer the following in addition to some very sound comments already made;
Not answering the question sends a clear message early to your prospect that you may see fit to ignore what he says...not a great indicator of future quality of service. Offering a "ballpark" can work, but perhaps a high and low bracket might encourage the prospect to start asking questions themselves...sales generally result from dialogues not monologues and you'd prefer the prospect to be talking more than you are!
At the outset, it's easy to imagine a seesaw with the price on the "up " end, as most prospects' priority. By explaining features and benefits the salesperson tips this imaginary seesaw until the benefits balance or outweigh the cost.
As others have said, a customer needs to see that your offer is affordable, but affordability is a movable feast! An assurance that you are competitive will often move the discussion along as others here have said.
Demonstrating that your offer is competitive should be easy, and if it isn't that's a business issue you should address!
Finally one detail point, a direct question about price is an opportunity to find out if the prospect has already engaged with competitors; this can be a massive indicator of the level of intention to purchase.
Hope this helps.
You should give an idea regarding qualities of your product compaire to other products even if your price is higher , quality level makes lots of different .
Ignore the question...If they just shopping for price, they are "tire kickers" so don't be defensive about it. Tell them b4 you set the price you need to know about needs, fit etc...You are correct in thinking it is always about relationships...
Firstly - you need to recognize that there are two different types of clients: 1) affluent clients that are interested in the features, benefits, quality and fit before asking the price. 2) cost-saving clients that are interested in the price before anything else. You need to be prepared for both sets of clients. One way to answer the price question is "We have several price points based on the feature set, benefits, and quality. Tell me about what exactly you are looking for in your product."
If they're asking what the price is, that's a good sign. At least you know they are interested enough to want to now if they could afford your product.
I find that technology products usually have a range of prices depending on the level of service.
I've been faced with this question on many occasions while marketing my SEO services. I ended up telling people my starting price and what my current maximum client is paying.
Q: So, what the cost of SEO then?
A: Well our prices start at around £300 a month and go right up to £1500 month or more. All of these have a 6 month minimum contract.
I will usually follow up with a further qualifying question about affordability. Something like
"Are those prices in your ballpark, could you afford say £500 a month for at least 6 months?"
If the answer is no then I move on to the next prospect, while leaving the door open if their situation changes.
I'll somethings drop in some scarcity of service too. Something like "I work with a limited number of committed clients so that I can give them the best service possible. I have 3 places left on my list."
Hope that helps.
Please do not confuse on that situation, here explain your all relevant product according to their needs with different price bands.
I completely agree with Will here. It's good to give the client a ball-park figure (depending on your product and how large your product/service price range can be!) as this can manage their expectations and sometimes even make the consultation more relaxed and focused on the important bits; value and the client need.
As Will rightly says it can also stop you from wasting your valuable time selling to someone that was never going to buy at that price in the first place.
Some people buy on price, others buy on value. Always best to speak to people that buy on value in my opinion.
In a world where everything is determined by price it's quite normal to ask the price question first. A lot of businesses face this on a daily basis such as photographers, coaches, training companies etc. Unfortunately because of the way we do business right now, through social media and not talking to people anymore, many company's lost the sense of service and so did the customer. We all know we can find out pricing of products and services online and people start shopping around without even knowing what they want to buy or even why they need it.
I see a lot of posts that the time of sales people is gone and everything is done online. This in my own humble opinion is total and utter rubbish. The need for a good sales person will always be there and can determine when to answer the price question in a proper manner. (sorry for the little rant)
There is no right or wrong here. Some of the advise given here is to give them the price straight away and get rid of the price shoppers. This might be true, but unfortunately you will leave out big opportunities. If your charm, friendliness, customer service and value for money is great, then your customer might just lose. They go to the competition thinking they get the same product for a better price only to discover later that you offered more value for a little more.
By not answering the price question however you will, every now and then, get a customer who will be annoyed and may even say I only want the price, not interested in your life story...Those are the ones you need to filter out. And from my own experience, they are very rare.
Many customers appreciate that you need to analyse their need first and if you explain it in a professional manner then this should take care of the price question straight away.
You could answer the price question with "certainly, may I ask you a few questions before we dive in?" Or "sure, but because our products have so many variations lets establish first what you really need in order to give you the best possible price."
A photographer I worked with always received the calls about their wedding photography. The first question was the price and surprise, they gave the price and never got the gig. We changed that by telling customers simply that they are not giving out prices over the phone as it all depends on what they would like for their wedding. Even when the question came up of giving them a ball park figure, we played hard to get and stated that he couldn't possibly give a figure as it depends on the service they require. There were different services, different types of photo albums, etc. So, they invited them in to have a coffee and a chat. 8 out of 10 customers took them up on their offer and they tripled their weddings for 2015 compared to last year.
As I mentioned before, there is no right or wrong here but keep in mind that only 10% o customers are making the price their priority. The remaining 90% still want a great service, value for money, great products and services and prefer a friendly person talking to them directly.
I hope this is helpful (sorry for the long post and the bit of a rant)
Hi Michael, while all the answers are good, I like Brent's comment that you need to be flexible in your approach and be prepared to jump around your presentation. I also have my own perspective on your question which is based upon my experience.
I think about your question in terms of the lead time to make a sale. I have worked in industries where a sale will take multiple years from first contact to close and I have worked in others where I have 30 minutes from first contact to close.
With the former (years), I agree with the comments about providing a ballpark figure, because there will be multiple meetings over several years as you develop the deep relationship that will be required to make the close. But I add that you also need to provide a benefit as to why your fee is attractive.
With the latter, I regard that as an opening to accelerate the sale process by getting the prospect talking through stating "well, that's driven by the needs of the client. So what are your needs?" And then progress into a needs analysis, where I can discuss my offer directly through how I propose to address their needs. Using this approach, fees are deferred until later in the conversation when the lead is on the hook.
If, however, they are persistent in asking about fees you need to know what the market is charging for your product/service because they either; see your product as a commodity; or they have done their homework. In both cases you need to explain why your fee is attractive.
"The price of our product (or service) depends on how it is configured to meet your needs. Without a thorough exploration and discovery of your history, environment, plans, and goals, I can not tell you what I don't know. If you indulge me a little further, I will be more than happy to explain how we will value your solution."