Dealing with Prospect Who Wants to Discuss Price Prematurely

Selling Skills | Prospecting | Managing Objections

On this episode, an IT executive asks: Recently we had a customer call us and tell us that they really like our solution, but they are about to sign with a competitor. Since we were not properly engaged, we did not give them the pricing and they closed the contract with a competitor. What would you have done? We often talk to developers who ask us about pricing for our solution when they don't even have the budget for sponsoring a lunch. How should we handle prospects who want to discuss price prematurely?


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Video Transcript

Thank you for that question. There are a couple of interesting points that are packaged up in there. The question about when do you disclose pricing in the sales process? and Can we qualify the budget earlier on to avoid wasting time?
I'd like to consider a couple of questions as we break that down to help us determine how to continue. The first is: Are they serious about engaging with us and considering us as a partner?
What I mean by that is, in sales, it seems like the sales professional ends up doing all the work. Send me this information, send me this pricing, put this proposal together. Then I may or may not get back to you, or I may be considering you as another column on my spreadsheet. So that when I make the valuation, I feel better about that decision.
This is why we need to put some actions back on the prospect. If we can get them to engage and respond, then is a give and take. If we're going to provide that pricing information, put a couple of stipulations around it.
For instance: "I'm happy to give you that pricing information. But it wouldn't be appropriate for me to do that at this point without further discussion about your priorities and needs, understanding the impact this problem is having on your organization, and the impact the solution will actually provide. So what I'd like to request is a 15 to 30-minute conversation to understand those needs better before I provide that pricing. Then after I do, I'd like the opportunity to present our proposal to your executive team."
This does a couple of things for us. It lets us know how serious they are. Are they willing to engage in a bit of give and take? And the third tactic is to redefine the rules of engagement.
Find out about the timeline and the decision-making process. Then ask for an extension. So we might say, "We're happy to do that but we need a bit more time to prepare our response and our pricing."
So we'd request a week-long extension. This does a interesting thing. If they already have somebody in mind and they're using us to fill out the RFP responses, then they're likely not to give us that extension. That tells us that our time might be better well spent focusing on new prospects and new opportunities.
Maybe getting ahead of the decision making process next time instead of being at that point where they're already considering our competitor, and ready to make a decision.
If they give us the extension, great, then we can have that meeting. We can further understand the requirements and put together a more thoughtful proposal. Another question we'd want to understand is, What's the pricing for? Do we understand those requirements? And I don't mean an RFI or RFP. But have we had a chance to have a discussion and dialogue with the customer to get to that next level, help them develop the need, and understand that pain in a way that we can help position our solution to uniquely solve it.
Again, unless we've had those conversations, it doesn't makes sense to proceed at that point. We're better off getting those types of opportunities out of our pipeline sooner and focusing on those that we can close.
The final piece I will mention though is around BANT. We've all heard about that in terms of budget, authority, the need and timing.
Looking at budget, it is important to say, "Well, can you help me understand your budget decision process? Do you have a budget already allocated? or Is budget something you're going to go after? And will pricing influence that or are you at the point of making the decision and this is just a checkpoint moving forward?"
If they don't have budgets set aside, if they haven't already allocated it, and we're not engaged at the decision maker level. Then the chances of us winning that opportunity are pretty slight at that point.
"Bad news early is good news." So let's think about that and see if we can't find out. If there's bad news, disqualify that opportunity and move on something that might be more appropriate.

SRG Insights is a Q&A video series where we answer your questions on the topics of sales, sales management, sales coaching, and sales training. Featuring sales experts with over 25 years of sales and sales management experience.  

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About Ray Makela

Ray Makela is CEO and Managing Director at Sales Readiness Group (SRG). He oversees all client engagements as well as serves as a senior facilitator on sales management, coaching, negotiation and sales training workshops. Ray has over 20 years of management, consulting, and sales experience and writes frequently on best practices for coaching and developing sales teams.