"It Costs Too Much"=You Screwed Up

Last Updated Dec 7, 2009 8:42 PM EST

Last week I posted a video explaining How to Squash 'Your Price is Too High.' Unfortunately, most of the comments missed the point of the post. The video recommended, when you encounter that objection, admitting that you screwed up and then trying to fix the problem you created.

Most commenters assumed that this admission of guilt was simply a negotiating tactic. Few seemed to understand that the reason you admit that you screwed up is because you screwed up.
The following comment to the original post neatly encapsulates my point:

I am in the auto industry, and what I have found (like most of the other post-ers here) is that EVERY client is going to say "your price is too high". It is a way to really ask you 2 questions; 1) How much can/are you willing to discount your product to save me $$$, and 2) I really want to buy now, however how can I say yes without making you (the sales person) think that you have won?
That paragraph sent a thrill of horror up my spine. OMG. If you're in a discussion about discounts and have got a customer who thinks he's going to "lose" if he buys, you have screwed up, big time. BIG TIME.

Here's the nub of it. Discounts only become an issue when the customer is convinced that YOU -- meaning the sales person -- aren't adding enough value.

Take auto sales, for instance. Unless the customer is a total moron, he knows your dealership bought the car for a wholesale price. Therefore, the negotiation is really not about the price -- it's about whether the value that you're adding justifies the markup above the wholesale price.

So you have two choices. You can go with traditional car selling behavior like pushing "add-ons" to raise the dealer margin, playing "talk to the sales manager" games, etc. Those behaviors actually remove value from the transaction by making the buying experience unpleasant.

And so you end up with a customer who thinks (correctly) that he's in a game where he can lose.

The alternative approach is to be completely honest about your business model. You explicitly show the dealer markup (including your commission), and explain that it's necessary because you're providing valuable services: product information, ability to test-drive, advice about which features might actually be useful (and which will not), etc.

Suddenly you're helping the customer make a good decision rather than trying to convince him to buy extra stuff in order to get your margins up. And, guess what, if the value you're adding doesn't justify the markup, you need to reduce the markup or figure out a way to add more value.

The real standard for Sales success -- and I'm dead serious about this -- is that you never, ever hear "your price is too high" or "it costs too much."

If you're still hearing those tired old objections, you're doing something wrong.

Period.