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While it is nothing new, it seems that lately price appears to be a growing issue and a greater challenge for most sales people. Perhaps the Wal-Mart factor is creeping in to the B2B world, could be the state of the economy, or the pervasiveness of purchasing or procurement “professionals”, it’s likely a number of factors, but price is spooking more sales people than ever. There is no magic in this article that will help you avoid the “price” issue, but there are some proven techniques and steps you can take to address and manage it on your way to winning more sales at a good price and fair margin.

Numerous studies have shown that while price is a BIG factor in most buy decisions, there are things that can be done to manage and balance it. One study showed that while price counted for about 40% of a buying decision, 20% was product related, quality fit, etc; 20% was interpersonal, that is how well the rep was able to create and leverage rapport with buyer or buyers; 20% was internal politics, this was an area that the rep could be aware of, and at times even influence.

The take away is that while you may not have the lowest price at any given time, if you have and can articulate the value of your product based on the clients circumstances, you have a means of mitigating its impact. That is can you work with them to arrive at a mutually shared and agreed on “value definition”. This will greatly rely on ones ability to create rapport, to help the prospect feel comfortable enough to open up and share relevant information with you as a seller. These two factors combined could give you 40%, an equal weight to price.

Dealing with internal politics is a challenge, but it can be leveraged if you are aware of the players, agendas and the buying organizations purchasing processes or often the lack thereof. Even if you can’t fully capture the whole 20% of this category, capturing a portion will give you a great boost towards winning the deal.

Assume for a moment your price is at the extreme high end of the range, but not completely outrageous, say at a point where you can score 15% of the 40% attributed to price. At best if you don’t shoot yourself in the foot (you know the foot you need to keep out of your mouth) on the political score and you capture 10% of the 20% in this category. Your product and your ability to present in a way that fully resonates with the prospect give you 20%. Let’s accept that you are amiable, empathetic, sympathetic, and all the other “thetics”, and as such score full points in the rapport category, that is another 20%. Well right there you score 65% (15+10+20+20), and win the deal even with a high price and low score in the price category. Compare that to a low cost provider who can match you on internal politics but not on rapport and product, it could well look like this: price 30%, internal politics 10%, product 5%, rapport 10%, equals 55%. This is why being aware of the customers buying process is key in overcoming price.

Other studies have shown that factors such as timeliness, competence, expertise and thought leadership, innovativeness, speed and accuracy in costing and invoicing, a sales reps ability to understand clients’ businesses, sales reps readiness to advocate for customer when issues arise, provider’s reputation, perception of provider as willing to invest in R&D to enhance client experience and others are all ways to balance and offset price. Again, none of these are going to eliminate price from the decision, but they are all opportunities to elaborate on the value you and your company bring, and serve in rationalizing your price.

Nothing new so far, but not always the easiest to execute; but with practice, these are all things that can help us deal with price. We all should be able to anticipate the various issues clients/prospects will raise when it comes to price, and with that we should be ready with our response and means of overcoming the issue in a mutually satisfactory way. But it doesn’t always turnout so well, because time after time it seems to come down to price. Sadly we are often the cause of this.

Once price is raised as an issue it is hard deal with other factors until the question has been closed off. Many sales people tell us that “the clients always go to price” and then they are stuck. The challenge is to try and hold off the “price” issue until all the other factors (see above) have been discussed and agreed, so you can talk about “price” in the proper context. When price enters very early or without context or mitigating factors outlined above, you’ll always be pushing uphill. So it only makes sense that price is dealt with later after you have achieved a “value base”, but most often it is not!

Having watched hundreds of sales people in real sales situations, hundreds more in scenario creations, we find that the reps are their own worst enemy. More frequently than they realize, they are the ones who raise the price first. We can only guess why this is, perhaps the hope that if they get it out of the way the hard part is done. This despite knowing (perhaps not admitting) that when raised too early, price will dominate and kill the discussion. Perhaps the feeling is “if I can’t get past the price I am not going to waist my effort here”, and with the magic of “self-fulfilling prophecy”, poof, the sale blows up because of “price”.

We suspect that this is not intentional; the reps do not want to go in and sabotage their own success. It is more likely that they are so nervous about price, so fixated with it that they rush head-long into it too early, like a moth to a candle.

We can also tell it is really not intentional because of the way it comes up, innocent questions like “What is the budget?”; “What are key criteria for a purchase decision?”; “what will it take to get you as a customer?”; “What kind of program are you on?”; “what is your volume?”; “How many users…?”; and many other questions, that when asked too early in the conversation put a focus on price much too early and out of context. We call these the “price trigger”, opening the door to talking about price before it makes sense.

Go ahead; look at which questions you tend to ask in meetings that allow things to go to price too soon. Don’t get us wrong, many of the questions above or that you identify in your approach are valid and need to be asked, the issue is when is it best to ask them. Our findings are that if you have not built a “value base”, moved towards a level of trust and rapport, then letting price come up as discussion point can be harmful.

Part of the answer is planning. In a recent article in The Pipeline, ‘Actioning Your Plan’ we discussed the benefits of planning calls as a means of achieving a “Next Step”, but another benefit to having a call plan is the ability to plan your interview with the client/prospect. This allows reps to see the meeting, ensure that they develop a base of value from which to sell and uphold price. By having a written set of questions, in the order in which you can best use them, will help you hold off the “price trigger”.

Another way to avoid “price” being introduced too early is to consider who you are selling to. A number of reps we work with tend to stay away from the real buyer and go to “traditional buyers”, procurement, purchasing, and strategic sourcing (our favourite), group managers. Many of these people tend to talk product rather than over all solution and benefit; they will look at price rather than total cost of ownership; they tend to look at numbers over value. Many reps feel that by having a “relationship” they will be able to work with these people. One rep explained to me “you can’t go around them, you have to work with them, once you have relationship, they throw you a bone, see what you do with it and then they will work with you once you have the ‘relationship’.” As a prospect once pointed out “isn’t it interesting how reps always tell you that they “won the account due to their relationship”, only to tell you next year that “we lost it because of our pricing boss”. Hmm, what happened to the great relationship?

Don’t get us wrong, we are not saying avoid price, no you should bring it up, and lead the discussion around it, but make sure that it is you who brings it up, at the right time, with the right person and for the right reason. Once you have laid the bedrock for a good price discussion, then go to it, don’t shy away. In fact we tell reps to make sure that they raise pricing before they get close to a proposal, we never leave a pre-proposal meeting without bringing up price, but it is us who drive, manage and use price to move the deal forward, not the prospect that drives it and uses it to get concessions. Go ahead, talk price, but plan it, manage it and use it to win deals.

What's in Your Pipeline?

If you are sad to admit, contact Tibor Shanto, Principal with Renbor Sales Solutions Inc., and find out how he has helped dozens of organization to fill their pipeline with real prospects - - driving real revenue.

For more information on helping your team sell better, write to: This e-mail address is being protected from spam bots, you need JavaScript enabled to view it , visit http://www.sellbetter.ca or call 416 671-3555.