Every time I see a deal we lost to the reason “your product is expensive” I do wonder what it really means by “expensive”.
Different people buy different things for very different reasons.
You don’t buy a Rolex and call it expensive coz “Hey it is just another watch that shows the same time!” You buy it to make a social statement. That’s your value derivative from a Rolex.
You buy a Logitech Keyboard for your Mac coz it is cheaper to the official Apple Keyboard. Your derivative here is the price paid to get typing done against the Apple premium for the quality of the build or the experience. Price paid to get things done is your value derivate here.
Think of it this way: the very definition of “expensive” asserts that the person calling it out does not see the value. That means you lost the prospect coz they did not see the value in your product.
This is how you could think of it:
If you did not show value, consider you have a sales problem or more like sales training problem and be sure you will lose deals and many more until you don’t train your team.
If you lost even after doing a Proof of Concept, or delivering a clear savings metric via an RoI Calculator then that would account to a genuine loss owing to prospect’s budgetary constraints to your pricing models (Return on Investments Calculator is to show savings done with your product).
How you place the value to your price is critical. This is where you actually justify the quoted price.
“Yes we charge 50% more than our competition. But with a product like ours you save 4x more on your ad spend. On your stated ads spend for the year currently, you will be saving $120K every year with an investment of just $40K on our product!”
I have told this often: all good sales must induce a FOMO (fear of missing out) in your prospects.
“If I did not buy this app, gosh am gonna lose out on more money!”
“If I did not buy this app, gosh am gonna spend more hours on excel!“
If you still lose the deal, then it is a genuine budget problem at the prospect’s end. Should you see too many deals lost to budgets, it is time for you to look into your pricing plans and perhaps create a new plan altogether should this specific customer-base be important to you.
A lot of companies out there like Salesforce and LinkedIn have Emerging Markets pricing plans which are far lower than the pricing for the same product bought in the US. The pricing segregation by region is important to them owing to the volume of deals in these markets and the very upsell/cross-sell opportunity.
The next time your sales rep says he/she lost a deal coz “the prospect found our product expensive”, I hope the above frameworks helps you breakdown why you really lost the deal.