27 March 2011
Posted in
Selling and Marketing
What are price objections?
Let’s think for a minute about some of the scenarios we face when selling web design and development:
- I already paid $XXX.XX to build my site and the developer has disappeared. I just need a few things fixed.
- I can get the work done in __________(insert foreign country here) for 1/2,1/4,1/8 that price.
- I am a new business and don’t have the budget for a full site, but I want it to look like ___________ (insert $50K site here). Can we just use __________ (insert canned solution here) and make it look like the other?
Why do we hear price objections?
Right now, we are in a buyers market for web design. The economy has brought about a lot of unqualified people with access to Wordpress, photoshop and google image search and they are going hog-wild selling $500 sites and the buyer knows it.
However, the buyer also knows that this is not the solution they want because they have probably already tried it. As I have said before, you simply cannot sell $500 websites that are an effective solution without imploding at some point.
So, they come to you hoping to use the slow market to talk you down and most of the time they really believe, because of the market, that they should not pay what you are charging.
However, if 16 years as a web developer has taught me anything, it’s that a $500 client is the same amount of work as a $5,000 client if your intention is to deliver a quality product.
How do I combat price objections? (brace yourselves...this might sting)
You have to educate yourself!
Let’s face it. If you have not taken the time to understand the web design and development process, then you are no different than the wannabe’s selling $500 sites. You have to be confident in what you are doing if you are ever going to convince a client that it’s the right solution and price.
Go study the solutions you are selling. Work with your developer to really understand the solution you are proposing or bring them to the meeting and have them explain it.
Finally, learn the process, learn the process, and learn the process.
You have to have get over your fear.
Clients can smell your fear. You are in a tough spot because you are usually not only the designer and project manager, but also the sales person. In sales mode, we always want to say yes and make the client happy, but when you close those cheap deals and then have to put on your production hat, you fast realize that you should have said no.
Not every client is a fit, so you need to accept that a lot of them are not going to pan out. The sooner you resign yourself to the idea that you are willing to walk away from the wrong client, the sooner you will start closing more work.
There is a little secret in the sales world called the “takeaway” and it really works. When you begin to tell a client that maybe they are not a good fit for your budget/solution/process, they very often do a 180 on you. You should try it, but beware, it takes some Juevos!
Stick to your guns!
Times are rough now and it it easy to waiver in the faith you have in what you are selling, but resist the urge to deploy a cheap solution. This is a slippery slope.
Your goal is to grow your business by selling more and bigger web projects. As such, reducing your rates to try and win the low-budget clients is not going to serve you in the long-run. You are going to spend all your time servicing cheap clients when you should be out finding the right clients.
Tactics for dealing with price objections.
Explain the process and what goes into a proper website.
I like to try and use this in the context of their business, because this is the same as every other type of work where you construct something. If you are talking with someone who manufactures a product, you ask them to explain the steps that go into producing their wares from nothing to finished product and why it costs what it costs. Ask them why they can’t do it for less money. If you are speaking to a realtor, you will be interested to hear WHY a $500K home cannot sell for $250K.
Ask them to suspend "price" for a minute and look at "solution."
Let me start by explaining that you should never...never...send a proposal to a client without going over it first. You have a solution in front of them and you need to explain the process and solution line-by-line either in person or via screen-share. Show them how you would do it with examples of your past work or where you got the idea to propose. Since you have already explained the process and why it is necessary to take the time, now you can ask them to consider the solution without price. Is it the right solution? If price didn’t matter, would this be the one to use? If so, then ask them why they are kidding themselves. Why would they ask their customers to purchase the wrong product or pay less for a product that cannot cost less.
A client that doesn't care whether or not they are getting the right solution is not a good client.
Ask them why they are speaking with you.
You can easily find a half-dozen other firms that say they can do it cheaper or faster. But chances are they have already spoken to cheaper or faster. They have already tried it themselves and failed. The reality is that they know you are the right vendor with the right solution, you just need to make it clear to them.
Usually, just taking the time to educate them on the web development process is the trick. If most “developers” really understood the process, we would have a lot less $500 sites. (Plug: This is why we created our Certificate Course.)
Remember the old sales adage: “Cheap, fast, or good...choose any two.” This is true in web development. Going back to other industries, how can it make sense that one contractor can build a home in 6 months for $100,000, while another says they can do the same job in 3 months for $50,000. Something has to give here and 9 times out of 10, it’s quality.
If they are looking for a cheap solution, why did they come to you? (Kind-of insulting, wouldn't you say?)
Address the “canned” solutions.
Canned solutions, like Wordpress/Joomla themes, Shopify, Volusion, ECwid.Com are great for certain purposes. If you want to just get a shop online cheap and fast, then Shopify is awesome and has some nice looking templates. Wordpress themes are all over the place and you can do a fair amount of customization to them with a little effort. This is great if the client is concerned with "just having a web presence."
However, you need to ask yourself what you are doing for a living. Are you the guy sitting up there in the strip mall cranking out 24 hour signs or are you a visual communications expert whose focus is helping clients grow their business. This goes back to the above about "Why are they speaking to you?" If they already have a solution and know what they want, why not just do it themselves?
Take it from me, as soon as you attempt to implement any sort of brand or sales messaging, specific functionality or more complex functionality into these solutions, you run into custom development. And, while these are great tools for rapid development and deployment, they tend to be singular in focus.
I heard a great example from Steve Burge, with Alledia, recently. He says to look at these solutions, Wordpress for example, as formula racing cars. They can do one thing really well, but you wouldn’t take a formula car to the mall during rush hour traffic. You need a solution that is flexible and flexibility costs money to develop. It can be done, but not in a $500 budget.
Out-of-the-box solutions are great for start-ups, but what you see is what you get!
Summary
So, in closing, remember that you are going to face more and more price objections in this market. It’s a buyers’ market and you are competing with a myriad low cost and un-qualified competitors who will promise whatever it takes to steal your work. Stick to you guns and follow the tips above and you will find that, although you won’t win all your bids, you will begin to win the bids that are profitable and the bids that will lead to referrals and bigger business.
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