Sales Talk2:

Question: “There are conflicting ideas in our office about when is the best time to bring up price during a sales presentation. What is your opinion?”

View from the Field
John R. Graham

A. One way or the other, price issues always seem to surface as the major hurdle in sales. It isn’t that the price is too high, although that may be the common complaint from customers and salespeople, alike.

The central issue involves two distinct approaches: “price focus” and “solution focus.”

1. Price focus. It’s easy for salespeople to believe that price is all that counts with customers. That’s true for some customers––but not for as many as we might like to believe.
   
   Think about it from the customer’s viewpoint. If you’ve been dealing with salespeople who are constantly pitching price, chances are they have conditioned you to think all that’s important is price––and everything else is pure hype. Simply put, there are salespeople who train customers, without realizing what they’re doing, to look for the lowest possible price, or the best deal, without taking anything else into consideration. As a result, customers don’t want to waste time. They expect the salesperson to give them the price immediately. It’s either on target or it isn’t. That’s it. Nothing more matters if that’s the focus.
2. Solution focus. The concept here is that the price should not be mentioned until the salesperson successfully has built the case to justify it. Most salespeople find this a daunting, time-consuming and difficult task. They’re correct. It is. The solution is totally different. It requires research, questioning, several customer meetings, thorough preparation and a presentation. The objective of the solution-based salesperson is to train, and in many instances to retrain, the customer to see the purchase in a larger context. The chances of a salesperson moving attention away from price are much better if the focus is on the customer’s situation, rather than the product or service. Oreck vacuums, for example, sell for a higher price than most other vacuums. Most noticeably, the TV commercials for this product never include the price!

--John R. Graham is president of Graham Communications, Quincy, Mass.

View From the Campus
Jeff Tanner

A: If there’s a bet riding on this answer, no one will win. Early, middle, or late – all are appropriate. To some degree, it is the customer’s responsibility to bring up price. While that’s not always the case, much of the following discussion is based on that premise, and assumes you are working with the decision maker.

The best time varies depending on what you are selling and your positioning strategy. If you are positioning on price, then bring it up early, close early and move on. Most companies can’t afford salespeople who sell only on price. At the same time, however, there has been very little scientific research on the timing of price information, so what I’m about to offer represents an overview of selling theory, necessarily broad due to space limitations.

The real issue is when the customer will see the value and accept the price as valid. If you are priced competitively, there always will be someone who costs less than you do. Understand, though, that the role of price, as information, varies during the customer’s decision process.

The customer’s decision process is really a series of several decisions. An early decision is whether to buy something or to avoid the problem. That decision is a function of budget. Can the buyer afford to fix the problem? This decision has to be made before the prospect will consider alternatives. If the buyer already has done some shopping, and most have, at least on the internet, then the issue of budget may have been resolved. At the very least, though, ask a budget question early so you can make sure that you are in the right price category.

If you get a price question early from the buyer, then it may be a signal that the buyer is still setting a budget. Respond as clearly as you can and then ask if that meets the budget. While some sales gurus suggest postponing a price answer, to give no answer only annoys the buyer. If you truly can’t give an accurate price because you don’t know yet what you are selling, then give the range, even if it is ridiculously large. The buyer will get the point and appreciate your honesty.

Another decision is what features are wanted. If you have the ability to mix and match features, then price can’t be completely known until all of the needs and wants are out on the table and the appropriate solutions are combined into one product. Alternatively, you can build both product and price simultaneously, letting the customer decide as you go how much will be spent. This latter method can be very effective if you have the decision maker present because at the end of the discussion, the buyer has decided on what is wanted and what will be paid. Closing the sale is already done.

If a buyer has decided that something will be bought, and has decided on the features before meeting with you, then the price discussion is more difficult only because you don’t know the value of the product to the buyer. Note, however, that in this instance, price can serve as a measure of quality. While you may want to postpone because you know you’ll get a price objection and you have no way to justify with value, failing to answer a direct question is perceived as untrustworthy. Give the price along with a statement about your quality and then ask why they want those features. If the buyer bristles at your questions, point out that you are verifying that you’ve selected the best option based upon their needs.

Early, middle or late. Where is the buyer in making a decision and how will that information be used? This is the factor that will give you your answer.

--Jeff Tanner, Ph.D., is research director at Baylor State University’s Center for Professional Selling, Waco, Texas.

Send your sales management questions to editor Janine Nunes at JNunes@douglaspublications.com. Please put “Sales Talk2” in the subject line.