Sometimes, when you give a sales prospect your pricing, they may come back asking for a lower number.
How you respond to this depends on a two factors:
- How far apart are the numbers?
- How badly do you want to work with this client — not because you need the money but because of who they are, what they do, or how working them might benefit you in other ways?
If the numbers are really close, you may decide to concede or asking for small concession on the scope of some additional value from them like an introduction or testimonial. If the numbers are too far apart, it’s probably a good sign that this is a significant mismatch. Probably best to say thank you and go your separate ways.
If you really love what this prospect does or really want to work with them for some other reason, then understand that you are no longer having a sales conversation so much as trying to figure out a way to justify a passion project or good marketing opportunity. Pick your lowest number and stop negotiating once you’ve hit that, no matter how much you like the prospect.
For every other case, I want to give you an example template to respond when you can’t say yes, but want to keep the door open. But first, some important context…
Foundations
Here are four things you need to understand before responding to any sales prospect effectively.
- In business, getting resistance, push back, or hearing the word “no” does not mean the deal is dead. It may just mean that there is still more to negotiate. This works both ways — whether it’s the buyer or seller saying “no”.
- Prospects who try to push you around in the sales process are likely to push you around as clients. The sales process is your first opportunity to establish the relationship as an equal balance of power. It’s important not to miss this opportunity.
- As I’ve said before: “Price, in our society is not a measure of value…but it is a signal. It is a signal of the value a business puts on their product or service.” If you too willingly lower your price, you are signaling that your price was loose and arbitrary to begin with. This lowers your credibility. It weakens your brand position.
- People, products or companies without substitute do not adjust their price simply because someone wants it for less. If you want Barack Obama at your conference, you pay his fee. Same with Brene Brown, Simone Biles, Gary Vee, Tony Robbins, etc. If you want The Harmon Brothers to make you a viral video commercial, you pay their fees. If you want The Weeknd to play at your wedding, it’s going to cost you.
Knowing all of this leads to a few important ideas.
- The more irreplaceable your market position, the less vulnerable you are to substitution and competition.
- The more irreplaceable your market position, the easier your can justify higher prices (see: Supply and Demand)
- The more irreplaceable your market position, the more power you have to control the sales process.
When you are one of many options competing for a single client, you have significantly less leverage than if you are the only option with a multitude of clients competing to get some of your time and service.
Now, knowing all of this, here’s how to respond to a prospect that wants to work with you, but wants you to do it for less than the price you’ve quoted. The purpose of this is the firmly established your pricing position, give them the option to still opt in and take the deal, or potentially open the door to a business opportunity later, on down the road once they’ve inevitably exhausted they’re cheaper options that don’t satisfy the need.
[Template #1] No, but if you want to later…
Hi [Prospect],
Thank you so much for getting back to me.
I completely understand if the pricing isn’t a good fit for your budget. If you’re open to talking about a reduction in scope, we may be able to get closer to the number you’re looking for.
Otherwise, what I can do next is introduce you to some other people/organizations that may be a better fit for your budget. While no one does exactly what we do in the way we do it, there are still a lot of great options out there, and we’d be happy to make some introductions or referrals.
We enjoyed meeting you and hope that there’s an opportunity to work together in the future when what we do is a better fit for your budget.
Sincerely,
Jeff
[Template #1] Translation
Hi,
We’re not moving our price. If you want to pay less, you can get less.
I’m so firm on not moving my price, and so confident that no one can do what we do that I’m literally going to introduce you to a competitor.
Ball is in your court. If you can find the budget, we’ll be here. Otherwise, consider whether you want to spend (potentially waste) the budget you have now on a substitute option instead of finding additional budget to work with us, the option you actually want to work with.
Unphased by walking away.
Jeff
A Market of One
Often times, when you send an email like the one above, you receive a reply informing you that extra money has been found under a couch cushion, and that they’d like to move forward. Other times, the prospect comes back and is more willing to work with you on the scope in order to fit the budget. In either case, you can now be certain the prospect respects your offer and pricing.
Until you’ve carved out your Brand as a singular option among the competition, you will always be competing on price, feature, and benefits. Everyone has a price, features, and benefits.
What they usually don’t have, is a unique position.
Don’t be rude, don’t be cocky, be confident in what you uniquely bring to the table. That is the only thing that gives you true price control in the market.
Once you start giving in on lowering your price, the trend is likely to continue, because you will quickly learn that when you lower your price, more people will buy. So, you may decide to just lower your initial asking price. Inevitably, someone asks for a lower price, so you discount, or lower your price again. The cycle continues.
Soon enough you will burn out doing your best work without reaping the rewards of that effort. You will start to lose the ability to recognize those prospects who will respect your initial price. Your brand may get stuck in a certain market, and you may struggle to ever get the chance to raise your prices to match your worth.
Develop a unique position, stand firm in your pricing without feeling the need to justify or prove it, and then make sure to deliver on your promises. The more that you do this, the easier it will become to walk away from a bad deal rather than give in and devalue your work.
Say no, but leave the door open to yes.
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P.S. Here’s some further reading:
