Isn’t it great being in a relationship? I’ve been married over 25 years and still love spending time with my wife. We entertain each other. We help each other. We console each other. We advise each other. We stretch each other. We root for each other. We trust each other. We have common goals.
Buyers and sellers are in a similar relationship (but maybe not as fun). They both want a successful implementation. They both want the most value possible out of the product. They both want the buyer to look good. They have common goals … except for pricing. Pricing is the one time in the relationship between buyers and sellers where their goals are not aligned. The more one side wins, the more the other loses. Each wants to win at the expense of the other.
Just like pricing, there are some things in our relationships where we “negotiate” who does what. Who does the dishes? Who cleans up after the dog? Who fixes the computers? Neither person enjoys doing them, but someone has to. The more one person does, the less the other has to. It’s a zero-sum game. (Unless we both agree to live in a dirty house.)
OK, this is interesting, but what pricing lesson can we learn? Answer: Let’s talk about price with our buyers at the right time. Not too early. We need to build a relationship with our buyers. Create an attitude of trust. Demonstrate our true desire that our buyer succeeds. Then we can talk about price.
Think about your first date with someone with which you’ve had a relationship. If you wanted a second date, you didn’t talk about your negatives, or anything that might be deemed controversial. In fact, I’ll bet that if you do talk about these items on the first date, you’ve probably been wondering why you don’t get many second dates.
By the way, wouldn’t you love it if, on your first date, your date would confess to all of his or her bad habits? That way you can quickly weed out the bad ones in search for ones that better meet your needs.
Similarly, your buyers often want to know your price on the first meeting. They are looking for reasons to disqualify you early. When they ask the price question directly, you have to give some reasonable answer. Here are some bad answers:
“I’ll tell you that after our third meeting.”
“I can’t answer until I know more about your requirements.”
“We don’t give that out this early in the sales process.”
Each of these answers looks non-responsive and makes it look like you’re playing games. They make it less likely you will get the second meeting.
Here’s an answer I like:
“Most of our customers spend between $xxx and $xxxx, depending on their requirements. As I learn your needs and you discover our capabilities, we will be able to narrow that range down for your situation.”
This answer looks as responsive as possible given the amount of information each side has.
What other answers have you seen work?
Pricing is a taboo topic early on. It’s the 800 pound gorilla in the room. Everybody is thinking about it, but we have to manage the conversation carefully. Bring it up too early and we may never get to the second date, (i.e. have a chance to build the relationship).
Speaking of relationships, Happy Valentines Day (belated). Oh, and if you didn’t get your significant other anything on Valentine’s day, do something nice for him or her now. It will come as a big surprise and you won’t have to spend as much.