Last post, we explored the timeless issue of Price vs. Value. In other words, do we reduce our price, or sell on the value we provide? And, by and large, and all (or most) things being equal, I recommend focusing on value.
When a prospect objects to the price of your product or service, it typically means that he or she feels (whether consciously or subconsciously) that the price they are being asked to pay is greater than the value they would receive. Or, not enough value above the price to overcome inertia.
In this case — and it’s up to you to determine this through asking the right questions — your job is to effectively communicate the true value.
However, there are those rare times when price is the true issue and no amount of value will overcome this. This is not due to an objection but instead to a…“condition.”
Let’s take a look at this through several examples:
1. Lack of Funds
Even though the value of your product far exceeds the price, sometimes it really is outside what they can invest/spend based on their current financial situation.
A clever example from a reader, while extreme, I believe makes the point. You have a new techno-gizmo and a great idea for a commercial you just know that, if you could air it during the Super Bowl, would bring in more than enough revenue to cover all costs and net you a humongous profit. However, with the $2.5 million price tag to air, plus production costs, there is no way you can raise the money; at least not before the slots are sold out.
Do you have a price objection? No. Whether right or wrong, you place the value at much higher than the cost. It is a condition. You literally cannot make it happen.
2. Lack of Credit
When I sold a somewhat high-ticket item early in my sales career, about 1/3 of the people who really wanted it simply didn’t have the credit to be able to qualify for a loan. The challenge was not a price objection, a value question, or a matter of priorities. They wanted it; they simply could not qualify. It was a condition.
3. Product is Not Available and Time is of the Essence (While this is not price-related, I’m including it because it’s still a condition as opposed to an objection.)
They want it and know it would help in the project they are undertaking. Unfortunately, they are under contract to begin in 10 days and you can’t possibly have it for them before 30 days. Again, there is no price objection or question of value; it’s simply a condition.
Yes, usually a price objection simply means a lack of perceived value. But, not always. The point is only that, as much as we speak of value overriding price, there are exceptions.
Have you ever come across this? And, can you think of any conditions I haven’t mentioned?
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Hi Bob. Awesome blogs yesterday and today. Thanks for the tags to the other great minds!
Being in a referral-based business for 15 years, price objections had been kept to a minimum because our referrals liked and trusted us; however, price objections did and do arise. The five main reasons our clients do business with us are Personal Service, Expertise, VALUE, Selection, and Fit. Your blog made me realize that VALUE needs to move from #3 ot #1… especially in the case of price objections. The exceptions you mentionend (e.g. Lack of Funds) can be kept to a minimum in my business by asking questions/qualifying.
The recent recession (that btw is over:) had led my company down “discount” and “special” roads; and unfortunatley from position of weakness. Pre 2008, sales and deals were not part of our vocabulary! Thanks for reminding that these discounts may still be ok if, and only if, they come from a position of strength.
Finally, I am reminded that I need to continue cultivating my supply of Endless Referrals so that the “know, like and trust” factor helps trump the price objections!
Thanks again, Bob.
My pleasure, Mary. Thank you for your feedback and wisdom within it. Much appreciated!
Great post, Bob. It does put things in perspective when it is not just price and value being considered. “Conditions” arise often in business. One of the ways to maneuver through that is to be aware, understanding and empathetic to the situation, at hand. In the past, I had a potential customer who could not afford to pay for a particular service. Instead of lowering my price, I suggested to touch base when “conditions” were more favorable. This act of understanding not only brought the customer back in a few weeks, but along came referrals (which I quickly turned into Endless Referrals : ) ) Keep up the super job, Bob!!
Chi Chi, great comments. And, terrific teaching. Thank you!!
In today’s business landscape, many conditions can be overcome if the business owner is flexible and begins to think with then end in mind. Maybe if there is an objection to price because of a condition, there could be a way of overcoming that condition. Remember the old Lay Away days? Why not resurrect that old idea. It worked for a lot of folks. I put my engagement and wedding rings on lay away because I was young, had no credit and didn’t have the money up front. I paid for them over a few months and then I picked them up!
If we look back in time, there were less boundaries and barriers to getting what you needed. People bartered, and traded a little too. I’m not saying this is for everyone – but the landscape is a changing and as Uncle Sam and inflation takes a bigger and bigger bite out of everyone’s pocketbook, business owners need to look at new (possibly old) and innovative ways to overcome some of these conditions!
Hi Randy, thank you for your feedback. The point of the article is that “by the very nature of the thing” a condition is something that cannot be overcome (as opposed to an objection which tends to be more a question of priorities). What you did in your example above is found a terrific and very creative way to move something from what may have been “incorrectly thought of” as a condition to something that is no longer a condition. So, if by doing that you are now able to help the person buy, that’s awesome. It is not a condition. I don’t want you to think I’m being nit-picky. It’s just that words are important here. A condition can not be overcome. But there are things – as you excellently pointed out – that can indeed be overcome with a bit of creativity and imagination. Way to go!!
Bob,
Thank you for this post. What you did for me here is to show me that there are VERY FEW “conditions,” for which I should not be able to service my client. LOVE IT. I’m printing this and calling it my “few excuses” article. If it’s not a condition, I WILL overcome it!!!
Much appreciation,
Amy
By the way, have I told you lately how much I love and appreciate you? Ya da bomb Mr Burg. 🙂 This article just excited the heck out of me.
Amy, thank you. That’s a great lesson in itself that you just shared. And, thank you for your very kind compliment, as well. I love and appreciate you, as well. 🙂