“What is a cynic? A man who knows the price of everything and the value of nothing.”
Oscar Wilde (1854 – 1900)
Irish dramatist, novelist, & poet
How to handle price buyers — Exploding the myth
One of the oldest tricks in the books is for a customer to demand that sellers justify their prices. Nothing is more absurd. Anyone who has ever attended a purchasing training seminar knows they teach four basic ideas:
- Always challenge the seller’s price.
- Always tell the seller their price is too high.
- Always tell the seller you can get it cheaper down the street.
- If you don’t ask for a discount, you won’t get it.
They also teach buyers to prey on the seller’s insecurities. The seller doesn’t know whether the customer can get it down the street for less money, whether the competitor down the street has it in stock, can deliver it, on time, as promised, and whether the competitor provides the same general level of services, technical help, support, inventory, order turn-around time, etc., at the same price. It’s easy for customers to say your competitor does all these things; it’s something else for that to be true. If customers beat you up for lower prices, you are probably inviting and encouraging those actions. How do salespeople invite customers to hammer them for price cuts or discounts? Usually, it is either through “wowing” or “cracking.”
Wowing is when you communicate to the customer that you think your price is too high. It happens when you say things such as:
- “Are you sitting down?” ·
- “You better buckle your seat belt before I lay this price on you.”
- “Do you think $20,000 would be too much?”
- “Don’t guess you’d want to pay $20,000, would you?”
- “Isn’t it a crime the price they charge for this stuff nowadays?”
If you communicate that you feel your prices are high, your customer will hammer you for a discount because they perceive you as an collaborator, working against your employer to get them a lower price. They also think that your prices are too high because if you feel your prices are too high, and you know what this stuff normally sells for, then clearly the price must be too high.
Wowing also comes from things you don’t say or, if you do say them, you don’t say them well. The No. 1 thing sales reps don’t say that gets them into trouble with customers is not to talk about price. Or if they do talk about price, they’re not comfortable. To test yourself, ask yourself this question: Do I like to talk about price? If you said no, it’s clear you think your prices are too high. Your customer instinctively knows that if you thought your price were any good, you’d be more than happy to talk about it! That’s why one of the first things a customer does is attack you with the question, “What is the price?” If you avoid talking about price, you are telling the customer that you feel your prices are too high.
Research shows that 94 percent of the time a sales rep will not raise the issue of price. When directly asked the price, 44 percent of the time salespeople tend to avoid answering the question. Why do you avoid talking about price? Only one reason: You feel your prices are too high.
Who are the six percent of salespeople who raise the topic of price? Price sellers. People who feel they have good prices tend to lead with price. The customer knows instinctively, if you thought your price was any good, you’d be happy to talk about it. When salespeople are uncomfortable or avoid talking about price, they are “wowing” in the eyes of the customer. And that means the customer is winning, because you have told them you think your prices are too high.
Cracking is when the sales rep communicates that the seller might be willing to negotiate the price. Cracking comes from things you say that sound like: ·
- “You know you’re one of our most valuable customers and we really want to do business with you again.”
- “Let me sharpen my pencil on this deal.”
- “Let me talk to the boss and see what I can do for you.”
- “What will it take to get your business?”
- “You know I want to work with you on this.”
- “What will I need to do to get the business?”
And of course, one of the most popular lines is,
Ø “Tell me where I need to be.”
Any sales rep who uses these expressions (or anything like them) is telling the customer they will negotiate the price. When you tell a prospective customer you might be willing to negotiate the price, you will negotiate your price. Your customer will hammer you harder when you crack.
When salespeople communicate to the customer that they feel their price is too high (or that they are willing to negotiate the price), those salespeople will end up cutting the price because they haven’t done a good job of selling. All they do is get orders by having prices lower than their competitors.
Sometimes we need to negotiate the price, however. Here is a rule of thumb that you should never forget.
If the customer makes you an offer, never accept it. You can get close enough to make him happy, but never just say ok. The reasoning behind this rule is that if he offers you $6,000.00 and you say ok, he is immediately thinking to himself that he should have offered $5,000.00.
A final thought:
If price were the only reason people bought anything, only one seller would win: whoever could survive the longest at the lowest price until everyone else goes broke. The upshot is that if price were the only reason anyone bought anything, we wouldn’t need sales reps. In today’s electronic world, all sales transactions could be handled electronically if price were the only reason to buy.
Selling means getting in the customer’s face and explaining why they should buy from you, notwithstanding the fact they might be able to get something they perceive as a similar product down the street for less money. It requires sales reps to be tuned in to every dimension of value offered to their customers, not just the price.