This is a little disclaimer that I will be adding to the beginning of every post in this ten part series so new readers that jump in mid way will understand the premise for these posts. If you have been following through the entire series, you can skip the following paragraph to get to the latest lesson.
If you are just joining us, I am writing a series of 10 basic principles that will help you increase your conversion rate of turning potential prospects into paying customers. If you missed that post, then I recommend that you click on the title, “10 Basic Principles for Turning Your Prospects into Clients” and give it a read before going on.
With today’s topic, I want to discuss why ballparking pricing right away benefits your business. I know there are some schools of thought that believe whoever puts the first price on the table loses at negotiation. I disagree and I’m not alone.
About a decade ago, I was fortunate to attend a conference where one of the speakers was then GE CEO, Jack Welch. The question came up about whether it’s better to put your cards on the table first or last. Jack said that he liked putting his cards down first because he wanted to keep the conversation moving forward instead of mired in games. Plus, he felt that showing his hand first allowed him to take control of negotiations instead of placing himself in a reactionary position.
If you sell a product, chances are that you have little to negotiate and therefore giving a price when asked is common practice, unless a prospect it trying to negotiate a packaged deal, bulk pricing or scheduled deliveries with discounts over a period of time.
However, if you provide a service, you may not post your rates for all to see. So at some point in your initial conversation with a potential client, the question of cost will come up. Instead of dodging it for a later date, use it to your advantage.
How can you use the question of pricing to your benefit?
Here are my top 3 reasons.
1. By providing a ballpark price, you test the waters, quickly assessing whether you should waste any additional time on a prospect.
There is the possibility that when a prospect asks you to give a price, you may not have all the necessary facts to fine-tune your proposal. Unless you have little to no idea what the prospect is asking for, ballpark a price and add the caveat that you wish to reserve giving a final, accurate price until you have all the facts.
By ballparking at this point, you can gauge the prospect’s reaction ranging from utter shock to pleasant surprise. You don’t want to waste your time putting together a proposal that falls far outside your prospect’s budget nor do you want to throw valuable hours away on someone that isn’t a strategic client.
2. Giving a ballpark price right away leaves the prospect believing there is less room to negotiate.
Everyone wants a deal. I have worked with and for people that make a game of getting the best deal possible. They have a Pavlovian response to any opening for price reductions – whether justifiable or not. You can minimize their wiggle room by framing in a focused budget range.
3. By ballparking a price, it gives you the opportunity to clear the air, move the conversation forward and ask the prospect appropriate questions to define their project.
Once a prospect asks the question, “how much will it cost me”, they often listen to little else until they get an answer. You may be speaking, but you are simply throwing out a jumble of words. Again, unless you are truly unsure of what they need in the way of your services, by stalling, all they hear is static until you quote them a price.
If you want to turn them from prospect into client, you must manage their listening. You want them to get excited about the benefits that you offer. You want to receive back articulate responses to your questions – especially the “expected results” question. How many times have you responded to someone with a flippant answer because you weren’t really listening?
Focus your prospect by responding to their request for pricing right away.
I am not suggesting that you give a price the moment the prospect answers the phone. You want to wait as long as possible for them to discuss details about their project, needs, goals, etc. before quoting rates. However, once the prospect asks, don’t be afraid to offer your pricing.
Next up is #9 of 10, “Submit a Persuasive Quotation”.
All The Best,
The Solopreneur’s Guide