pricing - overprotective or careless?

Is your sales team overprotective with pricing? Trying to keep it close to their chests until the deal is well progressed and they have demonstrated sufficient value? Or do they throw it out there as soon as asked, with insufficient context?

Both of these are losing strategies. The first suggests that you have something to hide. Prospects want to know roughly what the project is going to cost them, and if you constantly defer, they will first get a little antsy, and then they will get suspicious.

In the second case, especially if you are a start-up selling something which is not well-known or whose value is not fully appreciated, you can get thrown out before you’ve even gotten in the door.

How do you balance this?

It is absolutely crucial that when the prospect hears the price, they have a good concept of the value. This can be tricky early in the relationship, but there’re a couple of tools with which you can anchor the value.

The first is great discovery of their pain. Remember that discovering pain is not about asking them what their problems are, it is showing them what their problems are from the information they share. They may not be conscious that their current process is deeply inefficient – it doesn’t occur to them that having two junior staff members maintain a couple of immense spreadsheets is a waste of money, maybe six figures between them in salary and other costs. If they can see that this waste can be fixed by your product for, say, $20,000, then your cost is anchored against a value which is roughly 5x. Therefore, in that discovery process you need to help them see that potential saving. Even if they don’t fully buy in and need more convincing through the evaluation, they at least will be seeing your price in the context of a much larger saving.

The second approach applies where it is hard to get accurate data from early-stage discovery – you need more time and engagement. In this case, estimate. If you’re talking to a billion dollar revenue business which is selling $1000 widgets, and you can improve their production efficiency by 5%, then you can fairly quickly estimate, to an order of magnitude, how your product will help – even without any discovery. Once again, the prospect is unlikely to automatically accept your numbers, but they will see that the price of your product is anchored against a potentially very significant value.

Sometimes, the latter option leads you to the key conversation with more senior staff. At first, you will often be speaking to a relatively junior gatekeeper doing initial analysis, and they may not be in a position to understand the broader value. By positioning the full value of your solution, you can also position the need to engage with their management or other colleagues in order to evaluate this properly.