Sales Challenge: How do I get pricing right?

A common challenge for business to business salespeople selling large complex solutions is to know how to talk about pricing. Sometimes, even knowing what price to give for your service can be tricky. In this sales challenge, we’ll look at some key ideas to help you feel comfortable and confident when talking about pricing when selling B2B.

Qualifying for Budget

There are a few different times during the sales process when it is important to cover off pricing. In large complex solutions, it is often very difficult to provide a price before you have done your full discovery – as you are not yet clear on what solution is the best fit for the customer.  

You do, however, need to know early on in the sales process if the business you are speaking with actually has the money to buy what you are selling. This is what we call qualifying for budget – you are checking to see if they have the budget for your product.

A good way to do this without committing to a price too early in the process, is to share a price range, rather than a specific price. The problem with giving a price that is too specific too early, by saying something like ‘our solutions average at about $100K’ – is that it fixes that price immediately in the customer’s mind. Now, if you go back with a higher quote – they will perceive it as expensive.  Also, you don’t know what their budget is. They may only have $50K to spend, and you may have a solution to fit that budget, but they have immediately crossed you off their list.

A better way to approach this would be to say something like:

“Our solution ranges in price depending on your requirements from around $50k to $200k.’

You then have a great Segway into asking some more discovery questions. If they balk at the price range – then you can easily qualify them out as not being the right fit for your product. If they continue to engage you in conversation, this is a good sign that they have the budget.

But – don’t forget to actually ask them if they have the budget. Remember, at this early stage of the sales process you are deciding if you want to work with them – not the other way around. So, after sharing a range, you can ask them:

“Does that fit with your budget?”

If they say no – this is a good thing to learn early, before you waste too much time.

Pricing in a Competitive Process

Sometimes you will be in a situation where you will need to submit pricing for a complex solution in a competitive process. The organisation you are selling to may insist on getting three proposals for every solution they procure, or your competition may just be doing their best to sell in their solution instead of yours – and selling to the same organisation alongside you.

In these kinds of competitive situations with other businesses, you need to get the price in the sweet spot that is competitive but not squeezing your margins too tight and leaving money on the table.

Ideally, you should never be submitting a proposal to an organisation with whom you have had no prior discussion or relationship. In the ideal situation, you would have been building a relationship with the organisation you are selling to over a long period of time and already know what is important to them. You already have done your discovery and have some good contacts in the business you can reach out to and ask questions.

This is the key. If you have a good contact in an organisation, don’t be afraid to speak to them and have a discussion about pricing.

Note I said speak – not email. You do want to avoid putting pricing in writing ahead of a formal proposal.  

Say, for example, you have the option of presenting a few different solutions to solve their problem. They range from $100K to $150k – but you are not quite sure what pricing level will work with them. You are nervous if you price it too high, you might lose the opportunity to the competition. Likewise, you know that the higher priced solution is a really good fit for what they need. What to do?

This is where if you have a good champion in the organisation you have been in conversation with, reach out to them and ask them for advice. Ask them to meet for a coffee or give them a phone call and ask for their help. You could test a tighter price range on them:

“I have been doing the pricing for you, and we are coming up somewhere between $100k and $150K – is that in the ballpark?”

By doing this, you are not asking them to commit to a price, but you should get an immediate feel by their reaction if you are in fact in the right ballpark.

Give yourself a buffer

Remember when you are submitting to large organisations, they will always want to negotiate. So, ensure that you have factored this into the first price you give.

A good way to do this is to include some things in the solution that are not critical  - that are ‘nice to haves’. This means that if they try and push you down on price, you can take them out of the solution. It is always best not to give way on price for no reason – ideally, if the price reduces something should come out of the solution. Or – you can ask them for something in return. For example, you could reduce the price based on their agreement to do a case study with you on completion of a successful project.

Don’t over think it

At the end of the day, remember that price is just another part of the solution you are selling them. In a good sales experience, both you and the customer will walk away feeling good. Keep that in mind, be authentic in your conversations, and you will get the pricing conversation right.