How To Stop Wasting Time On Unprofitable Deals: Don’t Delay The Price Discussion!
Traditionally, salespeople have been taught that they should not share the price of the product/service until as long as possible or mention an extremely low price to attract consumers
The philosophy behind this approach is that you want to get as many prospects as possible and not scare away anyone up front. Then in the end, when you have them them interested and eager, you then share the price and people will buy because now they are interested.
Now, this approach sounds good on paper and it may work sometimes, but when it comes to larger deals where the sales cycle is much longer, by delaying mentioning your price or getting their budget expectations, you are going to be wasting a tremendous amount of time.
When you rope in tons of prospects by either not revealing the price or attracting them with a very low price, all you have is tons of non-qualified prospects. You still have to qualify them to figure out the ones that really have the potential to buy at the price point at which you wish to sell.
Here is where businesses and their salespeople make a major mistake that wastes a ton of their time. They spend huge amounts of times developing proposals after proposals, demos, pilots, and have countless phone calls, skype calls, in person meetings, many of which they fly to, in order to cater to the prospect’s “needs.” They do this without ever once trying to establish their budget or mentioning price, so that they don’t scare off the customer.
Finally, when they think the value is established and the customer shows interest in buying, they then reveal their price. And then the “prospect” tells you, it is not of their budget! Or, the prospect says they will revert. Then you never hear back from them, after having spent countless hours working with them!
It’s almost like in online dating some people try to hide what they really look like for as long as possible, hoping they build an emotional connection first, while in reality the other party will often judge them eventually on the basis of what they look like!
Who is at fault here? Is it the prospect or us? It is us for not having qualified the prospect up front. We are at fault for not establishing a rough estimate of price as quickly as possible or finding out their estimated budget.
The selling organization’s first and foremost goal should always be set price expectations upfront or to gather an estimate of the prospect’s budget as quickly as possible. If they are not willing to share the budget first, then ask them their requirements. Based on their stated requirements, share with them an estimated range of your pricing, which is obviously not final but subject to the services they choose to go for. This quickly establishes a range within which they can expect to avail your product/services.
Now, they may either stop responding or they may say it is out of their budget. Either way, at least you established that they are unlikely to buy at your given price point without investing a huge amount of time with them. This is not a bad thing. Getting the hard questions out of the way in the beginning makes it clear to both parties whether it is realistic to work with each other, without wasting each others’ time.
If they say it’s not in their budget, you can ask them their budget again as you have made your pricing transparent. Sometimes, they will share what their budget is and you can determine whether there is something of value you can offer to them in their budget. Sometimes, if you are dealing with the person authorizing the cheque, the real decision maker, you can try to convince them of your product’s value and they actually maybe willing to go beyond their budget.
If they say your price is too high, but they are still not willing to share their budget even after you have shared your estimated price, this means they are either “window shopping” or they are looking for the lowest possible bid. In both cases, it is clear once again that you are either not dealing with a serious buyer or pursuing a deal with terrible margins.
The final thing that can happen is they become aware of your pricing and decide they want to discuss further with you. Assuming you are dealing with the decision maker or the decision maker is in the loop of the entire process and you have done your due diligence to check if they can afford what you are selling, now this is a deal that could convert at your price point. These are the sort of deals where the selling organization should be spending most of its time!
Try experimenting with a policy where your salespeople will not develop demos, pilots, attend multiple exploratory meetings or develop lengthy customized proposals for prospects until the price expectations are set up front and you have done a basic check on whether the prospect can afford your services. You will be shocked to see how much time you will stop wasting on bad deals. Time is money and the more time your organization can stop wasting on dead end deals, the more time you can devote to deals that can be highly profitable and take your business to the next level!