4 ways to overcome price resistance on sales

Two young women look at the display window of a shoe store advertising big sales on Dec. 13, 2011 in Berlin, Germany.
Photo by Sean Gallup/Getty Images
Photo by Sean Gallup/Getty Images

Attention, Shoppers: J.C. Penney (JCP) is making headlines because they are not having a sale. There is a lesson to be learned here on price resistance for sales people.

Remember the days when retailers like Sears (SHLD) and J.C. Penney were always offering a great deal? A sale was once a big event, but then it was overused and became an everyday occurrence.

J.C. Penney recently announced that it is permanently marking down prices on all of its goods by at least 40 percent so shoppers will no longer have to wait to get the lowest prices. In fact, starting this month, the retailer has eliminated the hundreds of sales it offers each year.

Sales people are naturally nervous to talk price with prospects. That's because we have been conditioned by big retailers to have a sale mentality, which means we shouldn't buy unless we are getting a discount.

How should any sales person deal with price resistance? My answer is easy when price is the only issue. Do what J.C. Penney is doing: present the buyer with the lowest price option and win the deal.

But if you are not offering a commodity, price is a byproduct of other issues. You must be clear on these issues with the prospect or client so you can get control of the price discussion. Consider these rule-changing approaches:

1. Price is relative to business problems. If you are selling in the iron-triangle of Service, Quality and Price, then you are not selling value that solves business problems. You are selling into a comparative matrix that boxes you into a same-same measurement with your competitors. When you solve business problems -- time, money and risk -- then you are in a very different dialogue.

2. Price is a reflection of confidence in outcome. If there were a 100 percent guarantee that there would be a resolution to a buyer's business issue, then his or her willingness to pay that price could go up. When I get price resistance on my proposals, I ask this question: "If we could get you a $20 million increase in sales in one year, would it be worth a million dollar investment?" Their answer is almost always yes.

3. Price is a reflection of measurement context. In the world of business solutions, there is no such thing as a true "apples-to-apples" comparison. Complex solutions are almost never exactly the same in the solution architecture between two competing companies. That means that there is no valid comparison between you and your competitor in the area of price. For example, you wouldn't ask a nurse to remove a tumor, or a neurosurgeon to cure a cold. On the spectrum of care, these represent the same industry, but different problems and different solutions. This happens to you as well. A lower quality provider in your market is held up as "just as good as your solution" by your prospect, so therefore the only point of comparison must be price, right? Only if you allow it to be.

4. Never haggle. The difference between negotiating and haggling is simple. Negotiating is when you are making adjustments in terms, conditions and scope of work between two parties. Haggling is when you are asked to do the same work you have already proposed, but for less money. Period. I don't believe in haggling. If your work is priced correctly, then any adjustment in price will require an appropriate adjustment in scope, terms or conditions.

In my experience, the price resistance comes when no better context has been established for the discussion. Establishing the right context for the evaluation of your proposal is 100 percent your responsibility as a sales person. If you are getting price resistance and your offering is not a commodity, then the context needs to be adjusted.