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Common Questions and Answers
If you’re selling in the home or business-to-business, negotiating price is important to your company’s bottom line and to yours. Your commission depends on the selling price. The statement, “Your price is too high” is a very common objection. So, how you handle this objection affects your income. It’s important!
First, realize what this statement is saying and what it is not saying.
For some buyers, “Your price is too high”, is an automatic response; they say it every time no matter the stated price — they want to negotiate. For others the price is much more than they expected and therefore they assume that the price really is too high. And yet for some it’s a knee jerk reaction to sticker shock. However, this statement is not a rejection of your offer. They haven’t said they weren’t buying or your offering wasn’t acceptable. They are balking at the price. No other objection is on the table. This is your cue to begin negotiations. You have undoubtedly instructions from your manager on how to deal with pricing negotiations. I don’t recommend that you deviate from your company’s policy in any way. The following recommendation can be effectively inserted into practically any negotiating process. If you have doubts, clear it with your manager before you use it.
The “three-step price bump”.
The first step is simply acknowledging the objection, “I understand”. Give your acknowledgment some space, though. Count to three mentally before you respond. Don’t rush it. The second step is establishing a benchmark for the price. For example, “What were you hoping? What did you expect to pay for this (project/equipment/service) before I came to see you”? You may have to do a little helpful prodding to get a usable answer from them. Once you have a legitimate response, write it down. Then “OK, now that you’ve learned about all the features and benefits of our product [list the most important ones], what would you add to the price you thought it would be”? Listen to their response. If their response is at or over your price, your job is done (this almost never happens, but anything’s possible). The third step brings in a third party. “What we’ve found is that most of our customers find the price to be [add to the number they gave you to bring the price up to your offered price]. So, you see we’re right about where we should be? Note: Presumably you have other customers paying this price. The major benefit of this approach to negotiating your price is subtle but effective. The “three-step price bump” works up towards your price — not downwards with a discount. Buyers will always wonder if they have received the best price when you simply discount. This approach doesn’t eliminate the need for discounting, but it does give you a stronger base to work from. Generally, you can expect to get a higher price with this method.
Give it a try. It works. Make sure to practice it beforehand. Let me know of your success!
P.S. I realize that many products and services can be discounted. If you have authority to discount, you should include your discount in your initial offer if a discount is appropriate. If you discount the price after the price is on the table it should come from your manager or some other higher authority. Otherwise, you appear to be holding back. You can lose trust in the eyes of the buyer when you do this.
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