Every salesperson has that moment when they must pitch their price. The major obstacle they face is their fear of rejection, and its consequences. But when it’s done right, both the customer and the salesperson can feel a sense of satisfaction.
To earn your price, and leave the customer feeling satisfied with that decision, preparation is the key.
Both parties must win for each to feel satisfied with a deal. When you’ve earned the business and the customer is convinced that you offer more value than they can get elsewhere, then both are pleased.
To produce this result, your preparations should address 3 issues:
- Start early. The process of proposing a price or price increase begins long before you actually mention it to the customer, so begin with that end in mind. Learn about the customer’s business. How do they make money? What differentiates them from their competitors? What are their goals and why are they important? How have you or will you help them succeed in achieving their goals? What quantifiable benefits have you or will you produce? Preparing early for your ultimate proposal minimizes surprise for your customer and positions your proposal as an investment in their future rather than an as expenditure that must be made.
- Help them make money. Convert your promised quantifiable benefits into money. The language of management is money; decisions are evaluated and made using the language of money. How is an investment with you going to make them money? Increasing their sales or productivity produces more sustainable value than cost reductions. If you don’t have the specific information you need to propose the financial benefits, then make some assumptions “…based on our service to your market…” or “…comparable accepted proposals show that…” Choose an “estimated” selling price or an “assumed” hourly rate, and convert your additional units shipped or time saved into dollars, “…that may be invested elsewhere.”
- Anticipate reactions. Proposing options provides the customer with the flexibility to productively react to your proposal. They’re not trapped into debating a single proposal but rather can evaluate alternatives, guiding you to the most satisfactory proposal for them. To optimize this flexibility, mention all the terms associated with each alternative option and price you propose. Include your payment terms (net 30 days, etc.), discount connected to some factor (size of transaction, size or length of relationship, ancillary products or services), down payment amount, warranty scope and period, etc. This approach also presents multiple areas of possible negotiation related to your price. To react to a request for a price reduction, change or remove something that reduces the value of the offer – reduce the amount provided, or shorten the length of a commitment, or lengthen time of delivery, or change the product or service, or unbundle another product or service, or revise the payment terms.
Preparation increases the probability that both parties will be satisfied with a transaction.
How do you prepare for price proposals?
What must you do to convert your benefits into the language of money?
Need To Grow But Can’t?
What’s stopping you?
What are the consequences if you fail to grow?
