You’re smoothly working your sales cycle, teaching your prospective client how your solutions will become the best way for them to solve their problems, and all of a sudden they ask you for the price.
Happens too often right? They’re asking a question you have to somehow answer but you know it is way too early to discuss pricing. What do you do?
Before you answer let’s consider the laws of sales physics:
- The salesperson is responsible for leading the sales cycle at all times
- Accordingly, only the salesperson can decide when the time is right to bring pricing into the discussion (hint, it can only be after value* is agreed to)
- The client will fixate on the first number introduced into the sales cycle
- If you introduce price without quantifying value* (the positive financial impact to their P&L solving their problems with your solutions will help them achieve) you not only put yourself at risk of losing the sale altogether but now every discussion point will be tied to your price being too high…
Okay, so you just figured out you can’t give the price before they understand and agree to the ROI, right? But, since they asked for price, they just compressed your well-planned-out sales cycle…
My tactic when this happens is to pause the request with a question like, “I haven’t learned enough yet about what you are trying to solve to be able to provide a quote yet. May I ask you a few more questions to help us get there?”
My pre-call planning includes prioritizing the problem-related questions I want to ask in case I’m given a shorter meeting time frame. If I were planning to ask eight questions, I have them ranked 1-8 in terms of importance. This mid-cycle pricing request just shortened my ability to ask all eight questions up front, so I need to know what my top 4 are…
I then ask my top 3-4 questions to give myself a better idea of what I will be selling them and so, in my mind, I have a rough idea of the selling price, but have not said this out loud yet. So far so good?
Let me back up for a second. Part of my normal routine(?) (and it should be yours, too) is that I introduced myself at the start of this meeting (or the first time I met them, if this isn’t the first meeting) with a short success story to explain why I asked for time on their calendar in the first place. In this success story, which takes less than a minute to share, I provide the highlights of the top challenges we’ve solved and the related value that particular client received. For example, “…and they told me that solving those challenges generated a 14% increase in revenue the first year and, for them, that was worth $80M…”. This is a critical part of the sales process. Not only did it establish my credibility early on, but it put the idea of the 14% in their minds…
Fast forward to now. I’ve asked my additional questions so that I have a rough idea in my head of what the solution should look like and roughly what it will cost. So, now I can give them their answer in the right sequence; value before price.
The conversation goes like this:
Question: Remember the 14% our client achieved? How much would that type of increase be worth to you?
Answer: We’re running at about $600M today so 14% would be about $90M.
Question: That sounds great, how will your CFO (or President or whomever) like that $90M number?
Answer: They will like it…
Question: Good, then they should also like a 90:1 ROI ratio as the solution we’re discussing will cost you about $1M, does the ROI number sound right?
You obviously adjust the ROI question to match what your proposed selling price will be. List price, by the way, nothing discounted in this conversation…
Let’s do a physics law sanity check:
- Client will fixate on the first number in the sales cycle – right now they’re fixating on the $90M revenue increase and the 90:1 ROI ratio, how concerned are they about price? Answer is not very…
- Salesperson always leads – who decided when to discuss price, the salesperson did
This works all the time so please do it all the time. Think for a moment how the conversation would have gone had you given them the $1M cost answer first. Would they have listened to you for any part of the ROI discussion? Being prepared and starting the first meeting out with that success story means everything…put yourself in the driver’s seat from the very start and you are setting yourself up to deflect that too early pricing question…
Doug Von Koenig
Latest posts by Doug Von Koenig (see all)
- How not to sound like a rookie - August 5, 2019
- What Happens When a Prospective Client Wants Your Pricing Too Early in the Sales Cycle? - March 19, 2019
- Being Different Is Not the Same as Being Differentiated - November 5, 2018