A SMALL Price Decrease Is A BIG Deal

While it should be only on rare occasions, there are times when you will need to offer a discount and lower your price to close the sale. A well-orchestrated and properly timed price drop can indeed help close a sale.

However, a price reduction – no matter how small – done incorrectly can cost you the loss of more than just the sale at hand as well as additional sales; but also your credibility and reputation.

As you may know, I often write about this subject and how to properly reduce the price, including a methodology to accomplish this successfully. However, I have had requests to explain the method using more generic wording. So, without further ado…

The Formula
Take these steps for a proper price drop

1. Stand firm
2. Raise the value up to three times.
3. Find a justifiable reason
4. Slightly reduce the price
5. Repeat, only if necessary

#1: Stand Firm
This is where most sales people blow it. You cannot arbitrarily jump to lower the price as soon as the customer offers the slightest resistance. Hold your price.

#2: Raise the Value Up to Three Times
Always keep in mind that a price objection is not about price; it is about value. Don’t start debating and negotiating price. Instead, raise the value. Also, keep in mind that you will usually not have to do this three times. Two is normally enough for the buyer to feel that he or she did not “roll over.”

#3: Find a Justifiable Reason
If the price you first offered was indeed real, then how can you simply change it with the stroke of a pen? You have to have a legitimate REASON to change the price, and it should involve the customer doing something to EARN the reduction.

#4: Slightly Reduce the Price
Don’t instantly go to the bottom line! A small, incremental decrease could be all that you need. Often it is not the actual amount of money, but the small victory that the buyer needs to help him or her logically justify the decision.

#5: Repeat, Only if Necessary

What follows is a clear example of the process. As always, it is not a script, but will demonstrate the concept.

Sales Person
“So, Steve, we are looking at £200 per territory for three territories or £600 per month. Does that make sense?’

“Well, yeah, but that’s a lot of money per month. I don’t know if I can handle that.”

Sales Person
“I appreciate that Steve. However, if you sincerely have a problem with £600 per month to get your web site on the front page of Google, and dramatically increase your customer base, then you need this service immediately! Let’s get this paperwork done so I can take it up to our technical staff and get started today.”

“Well, on hold. I mean can you do a little better on the price?”

Sales Person
“The price is exactly what we are trying to reduce, Steve. There were 9,765 searches for YOUR services in YOUR area last month and the majority of that business went to your competitors! THAT is a heavy PRICE to pay for coming up on page three or four. Do you want to use 20 keywords, Steve or do you have more in mind?”

“I know, it can help. But what kind of special can you give me?”

Sales Person
“Please consider this, Steve: You told me that your average customer grosses you about £520. You also agree that with 9 to 10,000 hits on that front page, that you would HAVE to get a few new jobs every week, right? I’m not talking about hundreds, just one or two every other day or so. Steve, we’re sitting here debating £600 as you continue to lose £60,000 every month. I think it makes sense to put that money back into YOUR pocket, don’t you agree?”

“Yeah…I know it could work. But…I just don’t know.”

Sales Person
“You know, I have an idea Steve. I could really use a reference in this area. I mean, a respectable business and website that I can show to potential customers. I am certain that will help me gain at least two or three new clients in the area. If you will be that reference for me, and maybe even accept an occasional telephone call, I will pay you a referral fee in advance and take it right off the top.

I’ll give you 25% for three territory sales that I know I will make. So, that brings your areas to only £175 each or just £525 per month. Is that fair enough?”

1. Stand firm
2. Build value up to three times.
3. Find a justifiable reason
4. Slightly reduce the price
5. Repeat, only if necessary

Happy Selling


Sean McPheat
Managing Director
MTD Sales Training

(Image by FreeDigitalPhotos.net)

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How To Reduce Your Price Without Reducing The Value

Once in a while, (and it really should be just once in a while,) there comes the time when you absolutely have to lower your price to close the sale.

While this may seem like a simple and easy operation, it is something that sales people mess up all the time. Done correctly, a “small price drop” can indeed help close the sale. However, done incorrectly, the smallest price decrease can cost you the sale, the trust of the buyer, many other sales and possibly your reputation in the industry.

Handle With Care
“Price dropping,” reducing your price or offering discounts, however you call it, is an extremely delicate issue requiring skill and practice. Also, keep in mind that reducing your price is not a practice for EVERY type of business and product, so the following may not apply. However, if you are in such a business where a small price inducement may help clinch the order, then read on!

The Proper Way to Lower the Price
Follow these critical steps:

1. Stand firm
2. Build value X3
3. Find a justifiable reason

#1: Stand Firm.
This is where most sales people blow it. The sales rep made a great presentation and then proposed an offer that he claimed was his best recommendation, the best price and value. He told the buyer, that this is exactly what they need and this is the best price.

Then the buyer hesitates and barely objects, and instantly the sales person is ready to change the offer or lower the price! The customer says, “Boo!” and the sales person says, “Ok, how about THIS price instead!”

Will the REAL Price Please Stand Up?
Was the first price just a ruse? When you immediately begin to reduce your price or change the offer, you tell the prospect that your original offer was not in their best interest. You tell the buyer that the first offer was just a test to see how much you could get, and your credibility and any trust for you goes out the window.

You should close and ask for the order at your original price, a minimum of three times before you even THINK about changing anything. Stand firm on your original price and offer for as long as possible.

If you believe your offer was the best thing for the buyer, then why would you change it?

If you do NOT believe your offer was the best thing for the buyer, then why did you offer it?

Make your offer, ask for the order and stand firm.

#2: Build Value x3
Second, in effectively offering a discount, you have to build value. Most price objections actually have nothing to do with price or even the money. A price objection is usually about VALUE. In fact, almost all objections, one way or another, ultimately come back to a question of value.

Is it the Price or the Value?
In the mind of the prospect, the total value of the benefits received from the purchase, do not yet equal the value of the price or fee to obtain that product or service. In the prospect’s mind, the price is greater than the value. Therefore, you get what sounds like an objection on price.

“No…that’s too much…” The prospect is not saying that the price is too high. They are telling you that the price is higher than what it is worth. The value is too low.

The normal reaction to this is to reduce the price. However, since the objection is actually about the value, when simply reduce the price; you simultaneously LOWER the value—even more!

Therefore, before you lower the price, you MUST INCREASE THE VALUE. You should have a plethora of value building statements and “proofs” and testimonials.

“Steve, everyday your warehouse is losing money in delayed shipments. Our solution will stop those losses and put more money back in your budget!”

“Sarah, this plan will actually increase the value of your property…”

Build the value, build the value and keep building the value.

#3: Find a Justifiable Reason
So, first stand firm on your offer as long as possible. Lowering your price should be as a last resort. Then, build the value of the offer repeatedly. Now, if you have still not closed the sale, then and only then you might begin to offer a price inducement.

You must have a VALID REASON to justify reducing the price. If you can just take out a pen and magically change the price, then what is the REAL price? IS there a real price? Understand that today’s modern buyer is educated and perceptive. If you just change the price with the wave of your hand—today’s consumer is not going to buy it! (Literally)
You need a real and justifiable reason to offer the discount, and it cannot be that you simply want the sale. There has to be some benefit to you and your company, to offer a discount. If it is REAL money, then how can you freely give it away? What is the motive and justification for the discount?

“Sean, if you could be a point of reference for me in this area, it will help us make more sales. If you will do that, I will give you a small referral fee in advance by reducing this offer…”

Have a reason for the reduction and show how it helps you and your company. This is also a great time and reason to BUY referrals…

“Susan, every person you recommend that I can demonstrate our product to, is worth a lot to ABC Company and I; it is great word of mouth advertising. If you can give me ten referrals, I’ll pay you £400 and I’ll take right off of our initial fee…”

So, first, stand firm. Then build the value at least three times. Then present a justifiable reason for the price drop. Do this and you can actually lower the price and RAISE the value at the same time!

Happy Selling!


Sean McPheat MTD Sales Training

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The Proper Way To Reduce Your Price During The Close….But Only If You Have To!

Offering a discount to help motivate the prospect can often be a powerful inducement to close a few more sales.  However, dropping your price in the wrong way will cost you a ton of lost sales, it will reduce your margins to nothing and in addition you could lose the prospect’s trust and respect and possibly damage the credibility of your company.

The Steps to a Price Reduction (In the right way!)
Offering a discount is a delicate issue and you should only use it as a last resort.  However, when necessary, follow these steps:

1. Stand Firm 3x

2. Build Value 3x

3. Reduce the Price for a Valid and Justifiable Reason

1.     Stand Firm 3x
After you have offered a price and attempted to close on that price, you have to understand that you cannot just arbitrarily change it.   Once you made an offer, you must stick to that original offer and price as long as possible.   If you change or reduce your price too quickly, then what was your first price? Was the first price just a way to see how much you could get?  Stand firm on your original price, and close on it at least three times, before even thinking about a discount.

2.     Build Value 3x
As you are closing on the first price, continue to raise the value of the product or service.  Remember, price objections are actually about value, not money.  Continue to increase the value and costs of the prospect’s problems and pain. Raise the value of the original offer at least three times.

3.     Reduce the Price for a Valid and Justifiable Reason
Now, you are ready to slightly reduce the price, but only for a good reason.  You must have some justification to lower the offer.  If the prospect feels that your price drop is nothing more than the stroke of a pen, it becomes worthless.   Find valid reasoning and reduce the price as if it is your money that you are giving away. So you can drop the price by 10% but what gives? Also, this is also a great place to get referrals.  You can essentially buy the referrals from the prospect, offering the price reduction in exchange for contacts.

  • Stand Firm 3x
  • Build Value 3x
  • Reduce the Price for a Valid and Justifiable Reason

If you reduce the price incorrectly, you reduce the value along with the price.  If you price drop as above, you will raise the value as you reduce the price.

Happy Selling


Sean McPheat
Bestselling Author, Sales Authority & Speaker On Modern Day Selling Methods

MTD Sales Training

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