When salespeople hit a roadblock, they often come back with the complaint that “Our price is too high.” Often customers have valid reasons for arguing about price. Marketers should be aware of customer complaints and take action before they arise.
A Red Flag — Something’s Wrong
When customers complain about prices, it’s almost always a red flag about something else. Rather than simply lowering prices, giving deeper discounts or blaming the sales staff, it may be time to take a close look at the causes of pricing objections.
Here are six reasons customers object to high prices:
- A huge difference in perception. Customers may have a picture in their heads of your company, your product or your service that is at odds with your pricing. In other words, there may be a discontinuity in the customer’s mind between the product or service and the price being charged. When this happens, the customer will believe that “the price is too high.”
- Insufficient differentiation. The comment, “We can get it cheaper somewhere else.” generally indicates that your company needs to separate itself from the competition in ways that impact the customer. It suggests that customers are not seeing the added value of doing business with your firm. If businesses selling the same products or services are all viewed alike, then price becomes the only factor separating one from the other, thus making the buyer’s decision easy and automatic. Unless a business is clearly differentiated from its competitors – in ways that are meaningful to customers – price will be a constant issue.
- You may not have kept up with the changing market. Both markets and needs change. Just because a business did well with a particular product in the past does not mean that the product is automatically positioned to compete effectively in today’s market. It may be time to consider new strategies. Pricing problems occur when the marketers fail to match products or services with the current needs of their customers. Also, companies get in “ruts” when they approach “the same old customers” over and over and make little or no effort to find new ones.
- Customers sense a lack of commitment. This creates negative feelings about a supplier that often translate into severe price resistance.
- Failure to educate customers on the value of doing business with your company. Sometimes we are so eager to drive up sales volume that we neglect customer relationships. We don’t spend the necessary time and effort to ensure that customers understand they’re buying a company as well as a product or service.
- The price is too high. Maybe it’s not just a perception problem. Maybe the price really isn’t competitive.
The Question for Marketers to Ask
The age-old question, “Why should anyone want to do business with us?”, must be constantly reviewed. If our quality, delivery, service, and price are on par with our competitors, then why should we get the business?
Unless customers are given other reasons to okay an order, the price will be the basis for making the decision.
Be Proud of Your Price
Don’t let anyone beat you up for having a product that’s pricey. Announcing your price with pride goes a long way to proving that your product is worth its weight in gold. Here are three price closes for the next time a customer says “Your price is too high.”
- “I know that the figure I am going to quote you is higher than what you had in mind. However, keep in mind that this product is going to help you make more money than you figured.”
- “I just want you to know that the price of this product may shock you. But, of course, we are talking about one of the best investments you can make.”
- “Our price is not the cheapest. However, nobody can offer you more for your money than we can.”