When Customers Demand to Know the Price Up Front
Q. What should you say when the potential customer says, “Before we start discussions, I need you to tell me your price.”
A. Tell them your price.
What a concept.
I know, I know. Most of you reading this disagree with me, and you’re in good company. Many respected sales writers suggest just the opposite. But on balance – with all respect – on this point, I think they’re wrong. Here’s why.
Offering Price Up Front – Pro and Con
The case against answering an upfront question about price boils down to two arguments.
- You haven’t had a chance to anchor price to value.
- By answering an up-front price question, you encourage price-based buying.
By both of those arguments, you have lost control of the conversation. And that, most writers say, is a bad thing.
But that’s precisely the problem. If you approach sales by trying to be in control from the very outset, you’re already in trouble. Customers have never liked being controlled, and in this day and age they like it even less. And increasingly they don’t have to put up with it.
Aretha Franklin Selling
There’s basically one argument in favor of answering the question, and it’s simple: R-E-S-P-E-C-T.
If you respect someone at first meeting, they are positively inclined toward you. They tend to then trust you, and in turn treat you with respect.
If you refuse to answer the question, you are disrespecting the buyer, in at least one of several ways.
- You are trying to control them – and nobody likes being controlled
- They expect you to try and evade the answer, and you just confirmed their suspicions
- They think you have something to hide
Any way you cut it, a refusal to answer a direct question, whether it is a direct refusal or an ‘artful’ (read ‘obfuscatory’) refusal, is a statement that you either know more than the buyer, or do not grant the buyer the privilege of asking their own question, or both.
And buyers resent it.
The Positive Effect of Respect
Most buyers approach most sellers with a certain degree of caution – they expect the seller to try and control them. And, most sellers oblige them by trying to do exactly that. Which means the initial conversations are about dancing around questions, jockeying for advantage, each challenging the other.
But what if, right at the start, you opted out of that game? What if you could immediately convey to the buyer that you are not trying to control them, that you’ll answer any question they have, that you’re actually there to help them, rather than manipulate them to your ends? What if you could do that convincingly?
Then they’d be more likely to trust you. If they trust you, then they’ll listen to you. And if they’ll actually listen to you, your odds of making a sale go up.
Establishing Respect by Answering the Price Question
Buyer: I want to know more about your XYZ offering, but first I need to know your prices.
Seller: OK, sure. It’s $8000 for the annual plan, or $1,000 per month for 12 months.
[Pause. And seller, do not fill in the pause]
Buyer: Um, OK; so, it’s a better deal for the annual?
Seller: It depends on what you want; 2/3 of our customers do choose the annual plan, but 1/3 choose monthly.
Buyer: Other than cash flow, why would I choose the monthly plan?
Seller: For half of them it’s just cash flow; but others are intending to switch CRM plans within the year, so they value the flexibility.
Buyer: How does the offering relate to our CRM?
Seller: [discussion continues about product features, value, etc.]
Note there is no scripted answer to this dialogue, other than the first response: “It’s $8000 for the annual plan, or $1,000 per month for 12 months.” After that, everything is a response driven by the customer’s questions.
This is not rocket science – but it is science nonetheless. Call it the science of human relationships. When someone does a favor for us – like showing us respect – we unfailingly return the favor, by showing respect in turn. In sales, the currency of respect is listening.
If you listen to your customer’s question, and answer it directly, you are paying the currency of respect. The customer quickly gets the message – ‘This person is not trying to control me, they are respecting me. I’ll ask a few more questions, and if I continue to get that respect, I’ll show them respect in turn, by listening to what they have to say.’
If your service is competitive, this form of sales interaction will get you over the finish line. You end up with better sales results than if you had tried to control the dialogue in the first place.
The paradox: you end up getting better results by resolving to give up control over the customer than if you had tried to control them in the first place.
Sometimes people use the excuse that it depends on what it turns out the client needs and they don’t know that up front. But there’s nothing to stop you giving a typical range, or some examples to help their understanding.
Exactly.
Amen. I always ask sellers to consider how they would want to conversation to go if they were buyers. No one wants to hear “it depends.” Buyers of complex solutions aren’t expecting an exact quote upfront, but they do want to know if they should even continue the conversation. Many enterprise sales cycles are like an extreme version of car-buying, where not only will they not tell you the exact price, they don’t even want to reveal any pricing until after the test drive.
Charlie, as you point out, the act of listening to the customer breeds respect. I can think of no better place to begin a lasting engagement.
In your experience, does this apply as well for very high value fees, with a multi-option package?
Anna, I would say that the higher fees, the more complex the offering, and the more intangible the product/service, then the more this advice applies.
The point, again, is all about respect – showing that you respect the customer’s questions, and can be trusted to give straight answers.
To make something up, in response to a query such as you suggest, you might respond:
“Well, it will depend on a few variables, but let me tell you what they are and give you a feeling. First, my guess is that we’re talking a low six-digit figure here. Second, about 2/3 of our sales fall in that range – maybe 10% of the time we can do this for less than $100K, and rarely does it exceed $250K.
“The biggest variable tends to be the options you choose. The most frequent choice of our customers is to extend to options A and C; the second most frequent tends to be option B alone. I can give you some average prices for those typical options packages if you like.
“But clearly the main thing we should talk about is the relative value to you of the various options. I can tell you why some customers end up choosing which options, and we can discuss whether those reasons apply to you as well.”
“The options choice will be the biggest driver of price, and I’m happy to refine and narrow down price ranges for you as we go through that process.
“Is that responsive and helpful? What would you like to talk about next?”
——–
That’s how I’d suggest handling it, in broad terms.
Right on!
If he opens by asking price, I would guess that either price is his only criteria or that a specific price is a non-negotiable, but there is some flexibility. If price is the only criteria and your price is lowest, you win quickly. If it is not, you cannot win unless he changes criteria, which may happen when you explain the full package afterward. If price is one factor and there is no overlap, same thing – there is no sale. Move along.
To me, proving that you are responsive to a customer’s request and that you have nothing to hide is a better opener than any pre-scripted pitch IMO.
Hi Charles,
In a complex sale, how can you possibly discuss price unless you know the ‘scope’ of the project. If you’re selling a commodity or something where you can establish the entirety of the offer, then, why not disclose the price – If you’re confident in the value of what you’re selling?
Regards,
David Doyle
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