Whenever you ask someone for money, whether it’s for a product or service (if you’re a business) or a donation (if you’re a nonprofit), you risk hearing someone say, “No way!” or “That’s too much money.” And yes, this can happen even if the person approached your organization first.
This is why it’s smart to have strategies for overcoming budget obstacles before the obstacles turn into insurmountable boulders. Here are five approaches that do just that.
1. Show the value and savings over time. One of the most effective strategies for dealing with (or avoiding) sticker shock is to show the prospect what he or she will save over time. For example, a company that sells business mentoring software might break out the price and show the cost of investing in an existing employee and compare it to the cost of losing an employee who didn’t feel supported or encouraged to grow in the company. (These costs would include recruitment and training a new employee to replace the old one, not to mention the decrease in productivity until the position is filled.)
2. Break a larger price down into smaller numbers. You’ve probably seen or read commercials that say something like, “For the price of a daily cup of coffee…” By breaking a larger number down into a smaller number, you make it easier for the prospect’s brain to process and justify the expense.
3. Focus on benefits. “The gym membership is $500 a year, but your health and wellness are worth it, right? Feel better, look better, and give yourself the best shot at living longer.” See what we did there? Suddenly the $500 expense looks pretty darn good compared to all the benefits you receive in return.
4. Don’t apologize for the price. When you stand by your price, you show confidence in what you do and the value you deliver. Study companies that use this approach to great effect, like Apple (the price is the price is the price…no haggling involved).
5. Make it about something other than price. If you’re priced higher than all of your competitors, or if the opposite is true – you’re priced pretty much the same as your competitors – then you need to shift the focus away from price altogether. For example, think of it this way: are expensive perfumes much different from cheaper ones? Probably not. What people are paying for is the brand name, the status, the cache. And that’s the point you’d want to remind people about.
On the other hand, consider someone who owns a pizza shop in town. The owner’s prices are probably not that different from competing shops in the area. Okay, so what should the owner do? He needs to shift the focus away from price and focus on what makes his shop different. Maybe his sauces are homemade or they’re based on a family recipe passed down for generations. Maybe the shop buys only local produce. Or maybe the shop has a really great loyalty program. You get the idea.
BONUS TIP: Identify the biggest price obstacles your organization faces and practice (or have your sales team practice) overcoming these obstacles. Role-playing is a great way to make sure you and your staff knows the script. Listening in on sales calls or conducting occasional ride-alongs with sales people are two other ways to see how your reps handle price discussions with prospects and customers.
Do you have any other strategies for overcoming pricing obstacles? We’re all ears. Share them in the comments.