Revealing Price Too Early In An Enterprise SaleTweet
Recently, I negotiated and closed an account on behalf of one of my clients. The deal had the potential to be very large, yet the ultimate deal came through at a significantly lower cost than I originally proposed.
The main reason for this was that they had a price in their head.. this price was revealed to them by the CEO of the company. He didn’t do it in a bad way. They asked him a direct question as to what the software typically costs – and he answered it honestly. The problem is, the solution we ultimately proposed was significantly larger in scope than any other customer had experienced and this customer was going to need a lot more resources than other customers had ever needed. But, they had a price now in their head, and the negotiations were very difficult to move them off of that number. I was able to negotiate what I feel was fair terms for what they are getting and we are providing – but what we would have preferred was a much broader scoped contract.
One of the main reasons in large enterprise solutions is the fact that you want the customer focused on the solution rather than how much it costs. If you can deliver the right solution, then you can always work on the price later on.
When you focus the customer on working with you to find the correct solution from your product, then you will have his/her mindset where you want it to be – where you need it to be. For example, lets say that you sell enterprise software and that you charge per seat for your software plus set-up, maintenance, and custom consulting. When you start talking about how they can use your software within their organization, probably what you’d REALLY like to see is wide adoption of your software across the organization. Wide adoption should lead to a more satisfactory usage of the product, better results, and a happier customer – and set you up for additional add-on sales and services. Its important that your customer be thinking about that same idea – and sign on for that. Because if they buy into the idea that wide adoption will give them a better result too – then they will be more committed – more likely to promote the usage of the product. But, if they focus on the fact that its $X per seat, they may start doing calculations in their head and divert the discussion from wide adoption because they are thinking about the actual cost – not the solution you provide. They will be doing actual calculations instead of focusing on the correct solution.
When you eventually get to talking about price, at that point, if they have bought into the idea of the solution you provide, then you can always negotiate lower per seat licenses, a phased in roll-out across the organization, or throwing in seats for free in exchange for press or other non-cash items. But – since the customer at this point has bought into the solution, they will be focused on that in the same way you are.
So…HOW to get out of the price discussion when its brought up too early in this case?
When you are asked about price, you should raise exactly the points above. You want the customer to have a great experience with your product, you want the customer to use the heck out of your product, and you are probably willing to make concessions for those items. So… be honest and reveal THAT instead of revealing the price. I would say it something like this, “The price of this product is based on a number of things including number of seats, custom integration, and support requirements. But, mostly its based on the total solution. I’ve done very small deployments and very large deployments, and what I want to find with you is what is the right solution for your company. Once we know what the right solution is, we can work together on a price which is a win-win. I guarantee you that if we both think my solution is a fit for you, then we won’t let price be the barrier to deployment. I can certainly get creative on discsounts, payment schedules, and other items to make sure that we both win here. So first, lets determine what you really need from us.”
Of course, depending on your solution or product, you may need to change the above.
If the customer proceeds to question you on price, you have an opportunity to ask a question that you want to know. “Are there any particular budget constraints or particular initiatives that I should be aware of?” Its unlikely that they will answer that, but if they do… you now know what you are dealing with.
If they still continue on asking about price, you can provide a LARGE range to the customer so they know that you are serious about finding a solution and price that works for them. So for example, you might say, “I’ve done deployments of $10,000 all the way to $2 million. I’ve split payments across fiscal years. I’ve done subscription-based pricing, and capital expenditure pricing. You name a way to find the right solution, and I’ve probably at least entertained it. Its about finding the right solution for you.”
If they still continue on price, then you need to ask yourself if they will ever be focused on you – or if they are trying to find a way to say NO. Perhaps they are already about to sign with someone else, but just need a competitive bid. If they are singularly focused on price, then you need to understand that something else is at play and flush it out – or you need to ask yourself if you can ever be successful in their eyes – and if its a customer you even want.