The 4 likely scenarios when someone says “Your Prices are too high”.

Your prices are to high, customer negotiation

Your immediate response (after you have gotten over feeling like someone has stolen the wind from your sails) will probably be:-


“You’ve got to be kidding!” “I know they’re not too high, we didn’t pull these prices out of a hat! We have done our costings, other companies have got to be that high, and our costs are barely covered here, we’re absorbing a lot—how can they say our prices are too high? - Well hold that thought.

The real question you need to ask yourself is…. “why are they saying this?” there are 4 primary reasons.

1.Sticker Shock. Sometimes, a client simply is not up to date on the cost of what you have proposed (which hopefully bears some resemblance to what they had asked for). Maybe they’ve never bought this service, or not bought it lately. In any case, they may feel embarrassed by their ignorance. Not wanting to appear at fault for not being current, they may react with some aggression, masking their defensiveness. “You’re just quite a bit too high,” they say, hoping to bluster their way out of the difficult situation.

2.Budget Busting. Sometimes a client simply hasn’t thought through the combined costs, or the timing of costs, and the total picture ends up being out of sync with the reality of their budget. In this case, they may not be embarrassed so much as disappointed. But it may be hard to tell the difference from their tone.

Don't say my prices are too high. CFOCorp

3.Bazaar Bargaining. Some clients simply prefer to use the approach of a bazaar: viewing the

buying process as back and forth negotiation, and their stated price is simply an ‘opening gambit’ in an exciting game. In which case, the client is neither embarrassed nor disappointed—rather, somewhat excited by the process. But their game face will suggest anything but that.

4.Sucker-Punched. If you get a particularly aggressive push back from a client, suggesting strongly (even literally) that a competitor has deeply undercut you, you may have been sucker-punched by a low-balling competitor. It happens. If you’re honest, you may admit you’ve done it once or twice yourself. Therefore, their furrowed brows reflect a genuine belief that you’re trying something shady.

But here’s the key point...if you try to guess which one of these scenarios is operating behind the curtain of your client’s eyes, you have maybe one chance in four of getting it right. But far, far worse—if you choose to guess, without confirming your guess with the client, you will lose—even if you guessed right. Therefore the worst thing to do is start defending against the attack you are imagining in your own head. And the best thing to do is exactly what you don’t want to do—to ask the client, simply, “Can you help me understand just what you mean by that?”

Asking the Help Me Understand Question (why) You’re probably afraid of your mind’s version of the client’s answer in your head: it probably sounds something like, YOU “What part of ‘too high’ didn’t you understand, you fool!" CLIENT "Like costs too much, out of the realm, not going to win, out of line. Too high! What is it you think you need explained…you blithering idiot?” But the clients in our mind are far worse (hopefully) than clients in the real world . When you say, “help me understand,” real clients will react one of two ways. Either they’ll begin to explain (“well, we just haven’t got that kind of budget,” “we think you guys always come in high,” etc.), or they’ll look a bit confused and ask, “uh, what do you mean?” In either case, all you have to do is explain that “different clients often mean widely varying things when they say the price is too high.” Then read off the list above: “some find it like sticker shock; some have budget problems; some just figure our opening prices are just that, and some have been presented some really different proposals.” Go on to say, “I don’t know if I can help or not. Some of these situations lend themselves to working out, and some don’t. In any case, if you’ll share with me a little more about what’s behind your concern, then we can see if something can be done or not. If so, great. And if not, then we’ll both at least know we tried.”

The Intent Behind the Conversation Your words have to work for you; using the suggestion above may or may not do the trick. Which means, you need to be very clear about the intent behind this conversation. The intent is to treat price concerns like any other objective piece of information: you explore its meaning and implications with the client until you have a shared understanding. Your time to market is too slow? What do you mean by too slow? Compared to what? What are the implications of being too slow to market? What are the drivers of being slow to market for you? In that same spirit you want to understand the drivers of price concern for the individual in front of you. The fact that the discussion is about price and price is usually an emotional topic is not a problem—it’s a great opportunity. Because price is an equally uncomfortable topic for most clients (the Bazaar Bargainer an exception). And if you can be the one that turns a difficult one into a pleasant, curious, customer-focused question, then you are the one that gets credit for transforming the conversation into greater trust. Your intent, as always, is to develop a deeper relationship with the customer, and to do the right thing for that customer. You can never control the outcome of a price conversation; but being curious and honest about it increases the odds, and pays relationship dividends in future.

Perhaps you can even come to a mutually beneficial (win-win) solution where-by the base price remains the same, but you offer a rebate of say 5%-10% if sales/ fees exceed a certain level.

AND my number 1 piece of advice is:- “Know what you (and your products) are worth…and stick to it”

David Prestney is the founding director of CFOCORP an organisation dedicated to helping business owners and management make their businesses prosper, through the provision of highly experienced Part time CFO’s for a fraction of the cost of a full time position.


Other recent posts:-

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