“How am I supposed to respond to that?” This question was posed to me the other day when speaking with a startup founder.
This is an interesting problem. But you shouldn’t view it as a discouraging question to get from a prospect.
That’s because the prospect is conveying interest.
They aren’t saying your solution isn’t good, or isn’t applicable, or isn’t what they want.
They are simply saying they don’t recognize the value.
They likely want what you are offering, but they need evidence that the risk that comes with making the decision is worth it.
Customers want value. They want to pay X $ (or ￥or￡ or whatever)and get >1X in value. So when they state “Your price is too high,” they’re simply saying that they haven’t been convinced they will get >1X back.
Of course, it is completely possible they fully recognize the value but are looking to increase it by getting you to lower your price. (The advice that follows still applies.)
When you hear “Your price is too high,” your response should be something akin to “Really? That’s interesting. Can you elaborate?” Or “Hmmm, is it? Can you tell me more?”
That will cause a conversation to take place. And that conversation gives you the opportunity to ask questions and dig further into the economics of your prospect’s business.
It may well be that your price is too high, in which case the conversation will result in valuable feedback and the opportunity to make changes to your proposal. (Although the chances are much greater that your price isn’t high enough, which is a subject for another day.)
You’re just back in ‘sales discovery’ mode. And that means you have some questions to ask.
- Does your solution increase revenues? And by how much, and for how long? (Don’t lose sight of the fact that a sustained increase in revenue is likely ongoing, while your cost may be a one-time investment.
- What hard costs do you eliminate, like software purchases or additional staff?
- And what are the soft costs/benefits, like removing tedious tasks or increasing goodwill, your customer will realize? These all have value and need to be recognized. (Again, these savings are likely to be recurring…)
You can then use what you learn to explain all the ways you help them to reduce their costs, increase their revenues, and generally alleviate pain and problems from their business and their lives.
Ideally, you want to identify these various ‘value components’ earlier in the sales process. And you need to reconfirm them subtly and frequently with your prospect as you work towards your initial proposal. In this way, you’re establishing a mutual understanding that will eliminate surprises and decrease the likelihood of hearing “Your price is too high” in the first place.
At one level, “Your price is too high” is an indication that you need to work on your sales discovery, if only to streamline your sales efforts and make it easier for customers to say ‘yes.’
But at another level, ‘Your price is too high’ should be a genuine indication of interest. And the catalyst for a valuable discussion about value.