3 Ways to Respond When a Client Says Your Prices Are Too High

nice the question is had a good why conversation all box is checked sent them a proposal told them I was the expensive option ahead of time and the response was price point for this is higher than they anticipated at a price point of ninety thousand I I would expect more of a fully developed system might take their thinking cost plus pricing not the value of what they're getting any suggestions on where to go I don't want to I don't want to push I'm fine with moving on all right this is a really good question so when you have a sales converse lead comes in the door what's your hourly rate I don't have an hourly rate is that gonna be okay well how do you price your work I'm gonna give people project prices so they know how much they're gonna spend ahead of time things don't go over budget oh yeah that'll be great okay cool let's talk you get on a sales call they bring them about the project they tell you all these things may or may not be useful but they get it off their chest they're done brain dumping you ask a couple of probing questions and then when you're ready and you feel like you've exhausted all of their their information you go into the why conversation can we back up for a second so I can get a little more context about how this project is gonna fit into the overall business yeah sure let's talk about that you say well why did you why why is this the thing why do this why not not do this isn't there another way you could have solved this and based on the information they gave you in the brain dump you can probably suggest a few things like why don't you just want you just modify the system you have why don't you keep doing it manually why don't you you know so on and so forth and it looks lean why and all of those things and then you get into the why now questions and you can you know I won't go into the whole wide conversation but when you get to the end of it you want to have a sense of what it might be worth you haven't want to know what business outcome they're trying to achieve you want to know what needle they're trying to move on their business what's the KPI what's the leading indicator is it it can be intangible but it needs to be something recognizable you know you can you know measuring happiness is not something that you can put a specific unit of measure on but you can tell if someone is happy or not happy you can tell if someone's mood changes from not happy to happy it doesn't have to be a tangible bottom-line thing for you to be able to measure that a difference has taken place so even something as intangible as happiness is measurable in the sense that you can see that it changed and kind of you can see how much it changed are they way happier are they just a little bit happier you can you can measure this so you figure out what it is they're gonna measure what is a home run what would be a disaster what are you know what is that thing and then the magic part is trying to assign you know a value of you trying to predict what the perceived value to the client would be for that change that's the tricky part when you go and put together a proposal what you've done and you lay out three options this is you didn't say you laid out any options which could possibly be part of the problem here but let's say I told the most expensive option okay clarification I did have three in which one of the three was this one top option okay and of great and what were the other two prices okay so is 30k 60km 90k and they're considering obviously they are considering whatever the outcome of the top option is that's what they want if that's the price they're pushing back on okay so great so you offer three options and you price them and you ideally when you're pricing them you want to base the price on a fraction of what you predict is the perceived value that is the trickiest magic issed part of value pricing that's the hard part but you do that and okay great you present it to them in my mind the way I ran my business I would never like it was too late I would before when I press send I was like okay those are the prices for those three things that is the price each one of those individual prices I will not discount the price I will not knock it down I will not change anything about the price for those options if I even if I lose the job because it was one of those slippery slopes for me that if I started negotiating pricing I'd be dead in the water I'd be creating a bad client I'd be creating a client who the next time they needed work for me would it to themselves to negotiate the price because the last time I gave him 20% off just because they asked for it so you cannot do that I mean you can but it's a bad idea so there would be three reactions to your pricing they'll either be like yeah let's get some win how do I get a check to you like can we start tomorrow or that's the that's the whoops I've traced it to low response then there'll be the total sticker shock like like you are off by an order of magnitude like there's a extra zero on there that they weren't expecting so then you're like it's really hard to recover from that because you completely misunderstood miscalculated something you're either completely talking the wrong person or they are losing money and they seem they seem profitable and have a lot of revenue but they actually don't have a lot of profit or they're in financial trouble or you get this middle one where they're like mmm where the reaction usually is can you explain how you calculated that price because they're kind of like earn that's a little pricey in there and they're looking for a way to either talk you down or they're trying to justify that to themselves why it's that expensive so it could be either one of those could just be someone who always asked for just and that you you haven't actually said the person asked for a discount but they're implying it but you didn't actually say what they asked they didn't say oh you know could you do it for less no ask for discount yeah they're just putting it out there like oh this seems kind of pricey it you know it could just be a poker player move like someone who just always tries to get the best price regardless okay so a bunch of ways I would respond to this a possible depending on the specifics of the situation I've responded to this in different ways over the authority of the years one thing it this would be let's say I really want the job it would be very profitable at this price for me maybe it's been a while since had to leave whatever the reason is maybe if we got some motivation I've got time to deal with them I've got time to deal with them basically I could say something like and because they haven't said anything so you could just reply with one sentence what do you propose and put it back on them instead of you just like immediately caving on your price I know you're not going to do that but in general instead of immediately caving on the price or offering a discount or anything like that just be like well what do you propose and now you put it back on them now they're making a proposal and then okay you make them get explicit about it well you know we would do it for 75 and then you can you know 75 thousand and you say back well what do you want to take out of the 90 thousand dollar option to meet that budget you know which things in the ninety thousand dollar option do you not value that much and maybe you guys can sort of negotiate or reduced outcomes you know decrease the value to decrease the price say hey I'm happy to work with you on I'm happy to work within your budget what would you like to remove from the $90,000 option you know what value do want to take out of there like oh okay and now you're having a conversation this isn't that kind of negotiation I think is fine that's not a price negotiation that's a value negotiation you're saying what do you want to take out to find something in between the $60,000 in the ninety thousand option put it on them to make a proposal another thing I would do is say something like another thing I could do if I was feeling a little feisty err and I wanted to just push them you know I wanted I didn't want to engage in a value negotiation I just want to say now I think that probably basically if you want to say if what you want to communicate is ninety thousand dollars is totally fair for this it's ridiculously low in fact is a tenth of what you would hope to gain you could say something as simple as I'm surprised that ninety thousand dollars seems like seems like an expensive investment for something that and then you have to say you know that is mission critical for your business or you need I don't know what it is but I don't know what the big outcome or the reason for the project is but just take it back from the conversation like well in the conversation you said that this was mission critical bet the business project that is going to be a platform for you for the next ten years can you help me understand why you're only looking to invest you know ninety thousand dollars seems like a very small investment to to move toward that goal you know can you help me understand why that budget is so low that kind of thing and get into a and push them into basically respond to them in a way that they're probably not expecting they probably expect me to just discount it and say like oh well you kind of like call out with a contradiction in their behavior so you said this was really important and yet you're not devoting reasonable resources to it can you explain that that kind of a thing and then the probably the the most feisty thing I would do is just is just say like you know it's hard because they didn't actually ask for a discount yet so you don't want to respond to a discount request so it's hard to say it's hard to say well if they if I had asked for this kind of out can you do it for 80 and just say well I give it some thought but I can't make a bid this case for that so but I'd be happy you know so would you like to move forward at 90 if not I can introduce you to you know a junior developer who might be able to fit your budget something like that so basically and again when I said junior developer that would be something that they've already rejected as an option in the Y conversation so you know I know you said you didn't want to use junior developers for this but if you've only got 80 then you know I can introduce you to some people and you can take a different approach you know I 90 seems 90 seems fair to me basically okay so there are three different ways that you could respond to it yeah and in the chat it's like no ask for discount yes it is mission critical yeah so that would be my approach hopefully that helps

Channel: Ditching Hourly with Jonathan Stark

Views: 16,728

Keywords: How to handle you're too expensive, How to overcome price objections, Pricing, Client says your price is too high, Your price is too high response, Price is too high objection

Id: LdFlWI0acZ0

Length: 11min 7sec (667 seconds)

Published: Thu Sep 27 2018