How do you defend your price and preserve your margins?

how to defend price

Four winning scenarios...

In any sales approach, the price presentation and negotiation stage is of vital importance. It often determines the success of the sale - and its profitability! - but also the durability of the company's image and its credibility (see Stop excessive price discounting!) To help salespeople in this perilous exercise, Practys Conseil has identified a simple, operational approach to price defense - the CODE method - which goes far beyond conventional techniques for rebutting objections.

The four main families of price objections.

The CODE method is based on the identification of four main families of price objections: the customer compares

  1. price with that of a competitor whose product offering is different;
  2. the customer compares the price with that of a competitor whose product offering is equivalent;
  3. the customer does not compare the price with that of a competitor, but adopts a "gambler's" approach in order to obtain a discount or an advantage;
  4. the customer compares the price on a tangible, objective criterion that does not stem from a comparison with the competition (other customer, previous price, budget, etc.).

The first step in the process is to identify, with the sales team, which families their customers' objections fall into. The method for handling objections will then differ radically from one family to the next.

Overcoming price objections: four winning scenarios.

For each family of objections, there is a typical scenario and an appropriate treatment.

First scenario: the product offering is different from that of the competitor.

 

  • Fortunately, this situation is the most common and easiest to deal with. In this case, it's in the salesperson's interest to argue the technical specificities of his product and its advantages over competing products. He or she should demonstrate that, in view of all the benefits provided, the price is ultimately less expensive than the competition.

Second scenario: your product offering is equivalent to that of your competitor.

  • In this case, it's vital to be able to justify the price by the other components of the offer. Indeed, with products identical to those of competitors, the company and its sales staff must be able to justify a higher price by associated services (customer assistance, after-sales service, privileged clubs, delivery times, etc.) or by a strong brand image.

Third scenario: the customer "plays" and seeks a discount or advantage.

  • Here, the salesperson is no longer in the position of defending his or her price, but of negotiating it. This is a typical case where the salesperson must apply the 5 golden rules of negotiation:
  • rule n°1: take responsibility for your prices and commercial terms,
  • rule 2: identify the breaking point in negotiation,
  • rule n°3: descend in successive steps,
  • rule no. 4: always demand something in return for a sales gesture,
  • rule n°5: anticipate fallback solutions and the concessions you may have to make.

Fourth scenario: the customer compares the price based on criteria other than competing products (last year's prices, the price conceded to another customer, budget, etc.).

This tricky situation can arise when you have not been sufficiently vigilant at other stages of sales communication. In this case, it's a good idea to reaffirm your sales policy, while justifying the price difference with plausible reasons: a one-off promotion, a period of low activity, changes in commercial conditions justified by production and raw material costs, a progressive price scale, etc.

For each of these scenarios, Practys Conseil has developed specific, tailored responses and persuasion techniques, which have now been successfully delivered to over 2,000 salespeople in France.

Immediate results on sales and margins.

Satisfaction surveys carried out a few weeks after the price defence training sessions show that :

  • 95% of companies believe that this method has had a positive impact on their sales (increase in average basket per salesperson);
  • 98% believe that the CODE method has had a positive impact on margins (profitability per salesperson);

The top four most cited benefits of the CODE method are :

  1. "It allows us to respond to almost any price objection;
  2. "We feel better armed when faced with a pricing problem;
  3. "It provides essential reference points for understanding and presenting the different facets of the award;
  4. "It allows me to better manage my prices: to define them, correct them, defend them and add value to them.

Find out more about the CODE method in Philippe Lafaix and Daniel Huyot's book: Défendez votre prix dans la vente, published by Editions d'Organisation.