"Follow up pricing question, how do you justify pricing?" Tim II
Tim the 2nd, good follow up to 'when do you bring up pricing'. I will reiterate as the sales person you need to believe your price is a deal, so you can justify to your prospect. It is very hard to justify to your prospect if you don't believe.
Pricing is relative. Prospects natural relate your solution to your competitor’s price. What is interesting they also compare to their personal world: If I make $75,000 a year and I am buying a product for $150,000 I think twice as much as I make. If I bought a house for $450k, your product is a third of my house. If I just bought a car for $50k, your product is three times my car.
Justifying Pricing:
Tim the 2nd, good follow up to 'when do you bring up pricing'. I will reiterate as the sales person you need to believe your price is a deal, so you can justify to your prospect. It is very hard to justify to your prospect if you don't believe.
Pricing is relative. Prospects natural relate your solution to your competitor’s price. What is interesting they also compare to their personal world: If I make $75,000 a year and I am buying a product for $150,000 I think twice as much as I make. If I bought a house for $450k, your product is a third of my house. If I just bought a car for $50k, your product is three times my car.
Justifying Pricing:
- Hard ROI: This is the best way to justify but in my experience it is very difficult to prove true ROI, that says if you spend $150k with me, that a CFO will believe, you will either save $300k or increase sales $300k. If possible, a great justifying (closing technique) is going at risk based on the hard ROI. We should talk about at risk deals in another question
- Soft ROI (increasing quality, saving time, etc.): These are great to have and typically will depend if your prospects likes them. I like to use soft ROI but I do not stick my neck out too far incase I get an aggressive CFO who does not believe in soft ROI.
- Case Studies: Justify your price based on another client making the investment in your product. You can use one of my favorite objections techniques: Feel, Felt, Found. 'I understand Mr. Prospect you feel our price is too high based on our competitor, our client felt the same way, and they found the investment paid for itself with increase productivity versus our competitor.
- Competitor Pricing: Know where your pricing is in regards to your competitors. If you are higher or the same justify your value with additional features for the price. If you are lower push you are better (the same) at a lower price
- Other options: How does your price compare to other options. The costs of: hiring more employees; doing yourself; doing nothing; doing another project; etc.
Tim, good selling!
Reader Feedback, please click the comments below to give 'Tim' additional information on 'When to bring up pricing' and I want your feedback on my response. Shaun P
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