Put yourself in your prospect’s shoes. They have a relationship with your competitors. They have negotiated in their view the best service for the lowest price. Now your prospect encounters some challenges; the quality of your competitor’s services is no longer meeting your prospect’s needs. This happens all the time, your prospect’s business is changing, their customer base is changing and the demand is changing.
That is one of the reasons your prospect is talking to you. This is your opportunity to communicate what and how you differentiate from your competitor. Your prospect likes what you have shown and believes changing to your products and services would give them again the benefits over their competitors and meet the new needs and objectives.
What happens here is very important. Your prospect is hoping to get your better service for the same or lower price as the current competitor’s pricing. On the other hand, they probably are prepared to pay a “fair” price because of the additional value of your service offerings. At this stage, however, they do not know what “fair” is.
Your proposal, with a higher price than your competitor, is reviewed by your prospect. Initially, they will review your service offering to validate what was discussed with you at previous meetings. Then they will review the price. If your service offering is really different and better than your competition than your prospect will not be price sensitive. They realize changing their set-up will help them strategically. They just do not like to pay too much for that change.
The final step: you need to be prepared that your prospect will ask for a better price. Of course, they will ask for a discount; that’s their job, to get a better service offering, meeting the new needs and business objectives….at a fair price. Before your next meeting with your prospect, you need to believe your price is fair.
Here is the thing: if you discount now on your initial proposal than you agree the proposed price was not fair! If you stick to your proposal you say: “this is a fair price”. In other words, discounting is in your hands. Do you believe you add strategic value? If yes, then do not behave tactically. The moment you discount you devalue your service offerings which you truly believe is different from your competitor and is adding the value your prospect is looking for. Discounting makes you again equal to your competitor.
My advice: when your prospect reacts with: “you are very expensive” you say: “Yes, we are more expensive than others – it is, however, a fair price”
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