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.