You know the age-old Golden Rule—“Do not reveal the price until the end.” Even if you are new to sales, management has told you that you have to wait until the closing stages before you tell the prospect the price.
However, does such a rule or concept still have merit, especially in dealing with today’s modern and educated buyer? Since today’s prospect has instant access to a ton of information about what you sell before you even show up, and they are so short on time; does it still make sense to hold out on the price, even if the prospect is demanding to know?
In a word…YES!! Below are three critical reasons why you should still never reveal the price until you have built significant value.
#1. Price is Irrelevant Until You Have Established the Value For your product or service to have any value to the prospect, the prospect must have a NEED for that product or service. Before you can establish a need, there must be a solution. Before there can be a solution, you must unearth a problem. The significance of the problem for which the product is a solution, determines its value. Until there is such a value, the price is meaningless. The following analogy, though absurdly fictitious, will help demonstrate the point.
If I came to sell you a gigantic inflatable chair and I told you that the price for this huge, pink blow-up chair is £600, would you buy it? Would you consider it for a discounted price of only £350? You would have to think that such a child’s toy is not worth more than £10.
However, what if I informed you that the local reservoir dam just collapsed, the equivalent of a small tsunami is on the way, and in a few minutes, the entire town is going to be 20 feet under water. Now if I asked £10,000 for that same chair, you would consider it a bargain.
The price is irrelevant until you have established value.
#2. The Prospect’s Ability to Listen Disappears After They Hear the Price The moment you reveal the price, the prospect makes a buying decision. On hearing the price, the prospect feels they have all of the information they need, and makes a mental decision (usually negative), and that’s it. The prospect now has a closed-mind, and deems any additional information unnecessary. It becomes near impossible to build value after you have revealed the price.
#3. Price Before Value Creates a False “Price vs. Value” Perception The sale takes place when, to the prospect, the value exceeds the price. This is not about money. It is about perception and expectations in the prospect’s mind that determine how they feel about the offer. It is about emotion. When you quote a price before establishing value, it creates the perception of a price that far outweighs the value. No matter how you try to build value after revealing the price, you cannot change that feeling, because you cannot, (significantly or justifiably), change the price.
Conversely, if you build the value before price, in the prospect’s mind that price will be greater than the value. If you have done a reasonable job building value, then when you finally reveal the price, it should be but a fraction of the established value. Therefore, the prospect perceives the price to be far less than excepted and thus a proper price vs. value perception results.
And how exactly should you respond to the prospect who asks you for the price upfront?
“James, there are a lot of options and variables that we need to take into consideration before I can give you an accurate figure. Is it ok if I ask you a couple ofquestions to get some further information so I know which one of our products/service would be the right one for you?”
A lot has changed when it comes to dealing with today’s modern buyer. However, holding on to that price until after you have built the value, is one concept that must stay the same.