Written by Sean McPheat |
The Right Way To Drop Your Price
Step 1: Stand Firm & Ask for the Order X 3
Probably the biggest mistake most sales people make when reducing the price is they do so too quickly.
You cannot give away money.
You cannot lower the price too soon. You must stand firm on your original price as long as possible and believe you will get it. When you lower the price too fast, the prospect first begins to lose respect and trust for you because your first price was apparently just a ruse. The prospect begins to wonder just how low can you go.
You must remain firm on your price and ask for the order a minimum of times before you consider doing anything.
To do this, you will need to have something to say, some closing questions to continue to ask for the order at the original price. In other words, you cannot just keep saying, “But this is a good price, Mr. Jones, buy the product…But this is a good price Mr. Jones, buy the product…”
You have to have different closes:
“Mr. Jones, you and I both know that this product is worth easily twice that amount. Plus you agreed that you did some pricing before. Now let’s go ahead and put this order in place”
“Jane, the longer we put this off, the more money your people continue to lose. I mean, if you do not start this service today, you will pay for it anyway. Let’s go ahead and get you started on a new program today, ok?”
Put out a hand to shake, extend the order pad with a pen, do something, but continue to close. You have to do this a minimum of three times—with conviction.
Step 2: Build Value X 3
After you have asked for the order it is time to add to the value of the product. You must always increase the value before you lower the price. This is imperative. When you are in this situation, the value of the product in the mind of the prospect is at one level and the value of his or her money is at a higher level.
When you then simply lower the price, you consequently also push down the value. You must first raise the value, then raise again, then raise the value again and then slightly lower the price. When the value of the product and the money match = sale.
How do you raise the value of your product?
You must have several value building statements to add at this time.
“You know, Mr. and Mrs. Smyth, this policy will also add to the value of your home.”
“Mrs. Johnston, every day that your administration staff goes without training, they cost you money. Statistics tell us that the average employee spends about 22% of their day wasting time due to their inefficiency with the software. With your average employee earning £3,400 a month, I say that you throw away about £750 a month PER employee! This training program guarantees each person will increase their proficiency level by at least 30%”
You have to have some value building statements that are strong and real. You can also amplify the problem, which will increase the value of the solution as well. Fill in the blanks for at least three value-building statements.
Step 3: Get an Idea for a Valid Reason and Justification
Now you must have a very good reason to justly any reduction in price. You need to come up with an idea that will allow you to slightly lower the offer and you need to explain this idea. You need to sell the concept of the reason for the drop. There has to be some benefit in it for you or your company.
“You know, James, we do not have any clients in this area and we would really like to get our foot into this territory. It might be worth it to my company to do something to help make that happen.”
Getting referrals is a great idea…
”Ok, I have an idea, Bill. You know a lot of the business owners in this area. If you can give me the names of five of your associates so that I can give them a call to tell them about my product, I’ll essentially pay you for those referrals”
Step 4: Drop the Price for a Mutual Benefit and Close
Now lower the price and do it slowly. You should act as if you are giving away your own money out of your pocket, because you are!
If you are going to drop incrementally and very slow because of the nature of your product, then you need to have as many reasons. You should also be using a “Talking Pad,” to do this.
A talking pad is nothing more than a note pad or paper where you can visually write out the offer and the reduction. This “seeing” is important. Immediately after the reduction, close strong with an assumptive attitude.
“Ok. Bill. For the five names and numbers of business associates, for me it is like advertising. I will pay you £40 per name or £200 for the five names and I will take that right off of the price, right now. So, the whole thing comes to only £3,200, and you are going to love it. Now do you want delivery next week or should I set up a rush order?”
Originally published: 1 September, 2008