If the reaction you’re getting to your price tag right now is: ”That price is too high, there’s no way in hell”, and you want to change the reaction to “That’s a lot of money, but worth it”, this post is for you.
Note that this post is about value selling. It isn’t about selling snake oil. It’s about selling a good product or service at a fair price. At a high price, but a price that reflects the value that your offer creates for the buyer.
To be able to counterargue the “you’re too expensive!” complaint, there are four things that we need to do. And these four things are:
- Figure out the real motivation for purchase.
- Figure out what pain the customer risks enduring if he or she does not buy.
- Address all the non-price related objections to purchase.
- Understand the price reference and potentially try to change it.
That’s it. Simple, right? Yes, the devil hides in the details and there are important details that I’ll get into in a minute, but broadly speaking, that is it! This is all you need to do to be able to justify a premium price.
Let’s dig a bit deeper into each of them though.
Figure out the real motivation for purchase
Usually we don’t really get to the bottom of this.
Sellers tend to think that potential customers are looking for a solution to a particular problem, or for a specific benefit, but what they’re really looking for is to achieve an envisioned future life situation.
For example, people don’t buy efficiency as easily as they buy what they can do with the additional free time.
Let’s say your product is pre-prepared meals. You can try to sell it by claiming “buy my product and save time”. This is a benefit driven message. And it’s fine. It clearly communicates a benefit that buying your meals has. It’s easy to understand, and it’s important for people with busy lives.
However, you could instead say “buy my product and spend more quality time with your family”.
See the difference? The benefit is the same. Save time. But now you’re alluding to an image of spending time with the family. You’re helping the potential customer creating a vision of what he or she can do with that extra time.
In this case, you’re moving the price assessment from “how much is extra time worth to me?”, to “how much is spending more time with my family worth to me?”
The emotional appeal of the second one is stronger. The second sentence helps people visualizing a desired outcome: being with their loved ones.
Instead of selling:
- Pre-chopped vegetables (the product’s characteristic), and asking “how much are chopped vegetables worth to you?”
- Or time savings (the benefit), and asking “how much are these time savings worth to you?”
You’re selling the dream (the vision of what people could do with that time), and get to ask “how much is spending time with your loved ones worth to you?”.
And people usually don’t have the same willingness to pay for chopped vegetables, unallocated spare time, and time with the family.
Now, this is just a silly example, but what I mean when I say that you need to figure out the real motivation for purchase, is that you should be able to identify what is that vision that makes your target customers really interested your offer.
The point of this step, is to get your potential customer visualizing how their lives could be improved if they were to open up their wallets and invest in your offer.
Unfortunately, if your product has a high price tag attached to it, this might not be enough to overcome the "your price is too high" sales objection. So, let’s move on the 2nd step to value sell your offering and effectively communicate its high value:
Figure out what pain the customer risks enduring if he or she does not buy
Here’s the deal. Human beings are more easily driven to action to avoid pain than to seek rewards. It’s how we’re wired.
So, if you’re able to tap into what the potential target customers fear will happen if they do nothing, or if they select an inferior option compared to yours, you’re more likely to get them to act.
It’s as simple as that. Sometimes even just the fear of missing out can be enough to drive action.
I think this is a very straightforward step that does not require much explanation, so let’s move on the 3rd step to effectively communicating your offering’s high value and overcome the high price objection. And that is:
Understand the price reference and try to change it
Ok. Let’s assume that you’ve gone through the previous steps, and the potential customer says he or she still thinks that the price is too high.
Let’s address that price tag then.
There are several ways to justify a price, but some are a lot more difficult to use than others.
Justifying price through absolute value
The first way to try to justify your price, is through the value that the product or service will create for the buyer. This is what we’ve been trying to do so far. We’ve been trying to argue that the value you will create will be far superior to the cost of your offering.
However, if we’ve gotten this far without being able to justify the price through the absolute value route, it’s time to move on to the second way of justifying price: relative value.
Justifying price through relative value
The reason why relative value is an easier way to defend a price, is because we’re not apparently coming up with an arbitrary number out of the blue. People are more willing to accept a price when they perceive that there is a relative difference in price vs. another option, that goes together with a matching difference in value.
When you can argue that your offering is more expensive than another one because you are offering an additional amount of value that the cheaper offer does not provide, you only need to justify the difference in price, and not the entirety of the price tag.
And that’s a lot easier to do.
So, when a potential customer says the words “you’re too expensive”, what we want to know is: “compared to what?”
Because people think of prices in relative terms. When they say: “you’re too expensive”, they have something in the back of their minds that they’re comparing your offering to.
It can be compared to doing nothing, or it can be compared to some other alternative solution to their problem.
We need to understand what it is that to which our product or service is being compared to, because it can either be a completely unfair comparison (such as comparing 1 on 1 coaching to a book), or a seemingly reasonable comparison, but that still isn’t fair (for example, the reference product or service might even be in the same category, but offer completely different levels of quality, support, etc.)
Once we know what we’re being compared to, we can explain why our price is higher.
Let’s start with the case in which the reference product or service isn’t really comparable.
For example, it wouldn’t make sense to compare 1 on 1 coaching to group coaching. Nor coaching to an online course. Nor an online course to a book.
So, if you’re trying to sell an online course and people are telling you that your product is too expensive because all the information is available in books, you need to try to establish other courses (or even coaching) as references.
You need to justify why the price comparison that these people are making does not make sense. Courses and books are too different to be compared. They provide very different levels of value.
Note that so are courses and coaching, and I still just mentioned that we should try to use it as a reference.
Well, I said that because that reference plays in our favor, so why not remind people that “if they were to pay for a coach to lead them through the learning process, it would be several times more expensive”.
People won’t buy this argument, they’re not stupid, but still, it’s a chance that you get to throw a high price anchor into the conversation. It won’t hurt. Might help. So why not?.
Evidently, to be successful at implementing this price objection handling strategy, you need to have a list of other offerings that are kind of similar to yours (and preferably more expensive), that you can use as examples to justify that your price isn’t high.
The goal in this case, is to try to move the potential customer’s price reference from a much cheaper alternative that it doesn’t make sense to compare your offer to, to a higher priced alternative, so that the relative price difference becomes easier to justify.
And now the case in which the reference product or service seems comparable.
In a different situation, in which the product or service being considered as the reference kind of makes sense, we need to justify why even though the product or service at face value seems comparable, it really isn’t.
In this case, we may need to try to move the reference to another product or service in the same category that we consider to be more similar to ours and whose price is more in line with what we expect to achieve, or, get the potential customer to accept that our product provides more value than the one it’s being compared to, and therefore, is worth the higher price tag.
Note that to implement this line of argument, you need to have a good knowledge of both:
- Which alternatives to your product can be brought up so that you can explain how they compare to your offering.
- Which alternative references are easier to get people to accept as comparable, and which arguments work best to achieve this.
Unfortunately, getting this kind of knowledge needs some market research. Whether you conduct actual market research with potential clients, or you just gain experience through trial and error when trying to sell your product, you need to figure out the thought process behind choosing a reference if you want to be able to modify it.
But there’s one more way to justify prices left: through costs.
Justifying price through costs
This one is by far the easiest way to justify a price. When you say “I need to charge more because my offer is more expensive to produce”, people understand it.
If you say: "To be able to deliver this superior value..."
- “I dedicate more time to serving you”,
- “I dedicate more time to making the product”,
- “I use more expensive materials”,
- “I make bigger investments to make sure that I’m offering the best quality”,
- “I have higher customer support costs”,
- etc.,
People understand that you need to charge more.
It may not be that easy to convince people to hand you their hard-earned money because you CAN charge that much for the simple fact that you WANT to, since others are willing to pay it.
However, when you turn it into “I put so much into this that it’s only fair that I charge this much”, you move from a situation in which people’s perception is that you’re trying to twist their arm for the simple reason that you can, to one in which you tap into their sense of justice. You’re helping them understanding where you’re coming from, and that you’re being compensated for your effort and investment.
So, if you’re able to intertwine the relative higher value for them, with a higher cost to you, you can build a stronger case to defend your price.
At the end of the day people may not like your price, but they do understand that you need to get a return on your investment and the hard work that you put in.
And if they don’t... avoid working with them if you can. That type of people will never be happy no matter what you deliver, so just stay away. They’ll make you miserable.
Additional tip to justify price
And the final strategy in this 3rd step to defend your price is: bring up the stupid things potential customers are probably spending large sums of money on, and which aren’t getting them any closer to fulfilling any future dream.
Most people have little guilty pleasures that they spend their money on, and which at the end of a year end up costing them a lot of money.
Some people spend large sums of money on clothes, accessories, makeup, dining out, games, smoking, junk food… things that provide immediate pleasure, but that don’t really have a positive long-term impact in their lives. And the funny thing is… often they know that they have a bad spending habit.
So, try to build an argument around for example “how much did you spend on handbags last year? Or shoes? Or makeup? How did that improve your life? Where would you be now if you had invested on my offering instead?”.
If you’re able to do this, you can more easily show that spending their money on your offering isn’t that unreasonable (they’re making far worse investment decisions).
Evidently, in this case I’m assuming that your offering has a high price tag because it generates a lot of value, and that it has a long-term positive impact on your potential customers’ life.
If your product belongs to one of the “guilty pleasure” categories, you’re probably better off with a self-care/”you deserve to treat yourself” line of argument.
This strategy can be a bit situation specific, but usually there’s a way to use it. Even in B2B.
So. Now that we’ve defended our price, what happens if the customer is still arguing that you’re too expensive?
Well, let’s move on the 4th step to effectively communicating your offering’s high value. And that is:
Address all the non-price related objections to purchase
Unless people can’t really figure out a way to come up with the money, the high price isn’t the real reason why they don’t buy. What really deters people from buying, is not being convinced that they will get their money’s worth from the purchase.
So, they complain about the price. And they keep complaining about the price. But the REAL problem, is that they’re still not convinced that your offering will create the promised value for THEM.
When people look at the purchase as a cost coming out of their pockets, instead of an investment that will yield a return higher than the money they put in (monetary or not), they are afraid of letting go of the money.
So, if through the previous steps the potential customer already came to the conclusion:
AND he or she is still hesitating, it’s likely that there are objections to purchase that haven’t been verbalized yet.
The potential customer may have a fear that hasn’t openly come up (that the product or service will be poor quality, or that he or she won’t know how to use it properly, or that he or she won’t have the time to use it at all, or that for some reason he or she won’t be able to take full advantage of the purchase… who knows?).
The point is that you need to figure out what is this barrier to purchase if you want to try to remove it.
It’s common for people to be afraid that they will regret a purchase. People may fear spending all this money on something that isn’t worth it for them.
In some situations, they may even fear that the purchase might make them look foolish – this fear is very common in B2B purchases; nobody wants their boss to think that they’re stupid because they spent their budget on a subpar product or service. A similar thing can happen with spouses.
Anyway, you need to be on the lookout for what’s really deterring the purchase. If people were certain that they’d get their money’s worth, they would buy. If they had the money, of course.
So, try to identify what their doubt is. Why do they fear that the purchase won’t be worth the money? And maybe it’s not something that you can address, and the potential customer won’t buy. But maybe it is something that you can… but first, before addressing it, you must figure out what it is.
Anyway, this is it regarding the 4 steps strategy for turning a “your price is too high”, into a “your price is high, but a worthwhile INVESTMENT!”
As everything in life it’s not a guaranteed success, but it should help you pushing back on that “you’re too expensive!” claim.
An important final note:
If you’re feeling uncomfortable with your price (doubting whether it’s too high, or even feeling guilty for charging at all), first you need to work on your own attitude towards your prices.
You won’t be able to convince anyone that your offering is worth a high price if you don’t believe it yourself (unless you aren’t a very honest person, which I’m assuming that you are).
I do have a post on why you shouldn’t be afraid of charging premium prices (in fact, sometimes you should). So, if you’re struggling with convincing yourself, I suggest you take a look at that one too.
And that’s it for today. In my next post I’ll go over how to do desk market research for a new product or business.
I hope you found this one helpful, and to see you in the next one! Bye!