How to Handle Price Objections

price objections
Don’t you just hate hagglers? I mean the people who complain about your price points being too high, especially when they try to negotiate you down.

I wish I could tell you that I have a solution to stop people from complaining about your price points. But I don’t. What I do have is a solution to get those complainers over the fact that you have a price that is “high” and, more importantly, get them to not only accept your high price points but also feel good about handing over their money to you.

Here’s how you can handle price objections:

Create case studies

If you really want to show the value of what you offer, you have to create case studies. The simple ones won’t cut it. You have to give detailed ones, ideally with the exact things you provided as a service and the results.

To legitimize the case studies, make sure you put in testimonials from customers. This can be done in the form of a video or text. If you happen to go the text route, when using your customers’ testimonials, make sure you include:

  • Their full name
  • Company name
  • Their picture
  • Title at the company

If you want to see an example of a good case study, check this one out from Conversion Rate Experts.

Offer a free trial

One of the easiest ways to handle price objections is to offer a free trial. Remember, just because you are offering a free trial doesn’t mean you can’t take a credit card upfront.

With Crazy Egg, one of our biggest objections from people is that our prices are too high. We created a “free trial” offer, requiring people to put in their credit card before starting the free trial. That offer converted at 59% higher than our “30-day money back guarantee” offer.

Keep in mind that you will get a lot of people who will cancel your service before their free trial is up, so when you A/B test this, you have to include cancelations into your calculations.

Explain the value

The easiest way to demand a high price point is to explain how much money you are going to either make a company or how much money you can save them.

If you can explain this in an easy to understand fashion and provide case studies to back it up, it shouldn’t be hard to demand a premium price.

A great way to do this is through sales copy. Don’t worry, your copy doesn’t have to be sleazy. I do this with CrazyEgg and NeilPatel.com, and I also used to do it for my Quick Sprout Traffic System.

You could even spice up your sales copy by including a video, in case people don’t want to read your copy.

Offer payment plans

When I used to sell the Quick Sprout Traffic System, some people felt it was a bit too expensive. They didn’t like the fact that I was charging $197.00 for an eBook and video/audio training.

Instead of reducing the price, I tested out a few payment plan options:

  • 3 payments of $97.00
  • 4 payments of $67.00

Although both pricing plans in total were more expensive than the original price of $197.00, the 3-payments plan option converted at 34% better than the original offering, and the 4-payment plan option converted at 52% better than the original.

With the 3-payment plan option, I still got complaints about my prices being too high, but with the 4-payment plan option, I got almost no complaints. Plus, I was able to charge more than the original price of $197.00

Explain what you don’t charge for

Just like any good business, you want to go above and beyond for your customers. Which is why you probably provide a few extra little things for your customers at no charge.

When people start to complain about your price points, you should explain that you go the extra mile for your customers and talk about all of the little things you do for free.

You can even express this on your website by bundling all of that extra stuff you provide into a “free bonus” for anyone that purchases your product or service.

Explain why your price points are high

If people understand why your prices are what they are, they will be more likely to pay them. Tell them your fix costs, explain what their money is being spent on and even tell them your profit margins.

People know you are in business to make money, but no one wants to feel like they are being screwed over. If your margins are reasonable and you explain your costs to potential customers, they shouldn’t have an issue.

For example, Single Grain had an issue with their potential customers, who felt the company’s prices were too expensive. Instead of reducing their prices, they explained to their prospects why they charge so much. Then, they broke down their costs and even shared their margins. By doing this, they were able to sign on 33% more new customers.

Offer lower price points for less and then upsell

Granted, this won’t work for all businesses, but you could lower your price by offering a limited version of your product or service. Plus, if people are happy and looking for more, it creates upsell opportunities.

I actually had this happen to me when I tried hiring a copywriter by the name of Michael Williams. I didn’t want to pay his fee of $12,000, so he sold me on a smaller package that only cost me $3,000. Funny enough, after two months, I went back to him and paid the additional $9,000 to receive the rest of his services as I had a huge ROI on my initial investment.

At KISSmetrics, upsells make up almost 10% of our new monthly revenue. We’ve found that a lot of companies at first don’t want to pay for our higher plans, but within three months of using our product and seeing a positive ROI, they upgrade to a higher end plan.

Focus on features that make you better than the competition

If people didn’t see the value in cars like BMW or Mercedes Benz, they would just buy something affordable like a KIA. The fact is a car like a BMW or Mercedes Benz not only has more features than a KIA, but it is also better built.

Consider creating a comparison chart that shows how you differ from the competition. This is done on the homepage of Crazy Egg. It provided a single digit increase in conversions, so it was not a huge boost but better than nothing at all.

comparison chart

It also reduced support questions by almost half in regards to our prices versus our competitors’ prices.

Stress the drawbacks of a lower price point

In many cases, lower prices will come with a drawback. If you can explain the drawbacks of the lower price, you can persuade people to pay your premium prices.

A good example of this is RackSpace. They are one of the largest hosting companies and possibly one of the most expensive. They charge a lot, but their uptime rate is phenomenal.

If you ever speak with one of their sales representatives, they’ll quickly explain that they are expensive but that they rarely, if ever, go down. They’ll also explain that their competitors may be cheaper but that they tend to go down more often. Finally, they’ll close hard at the end by asking you what it would cost you for every minute your website was down.

For this reason, they have done extremely well with their high price points. The company is worth almost 9 billion dollars as of today.

Leverage perceptual price points

There are a lot of little tricks you can do to make your price points seem like they are lower than they actually are.

Walmart has actually mastered this. Instead of charging you $50.00 for something, they’ll charge you $49.97. That way you emotionally feel like you are getting a good deal.

If you want to learn more about psychology of pricing, you should check out this blog post on KISSmetrics. It has some great tactics with examples you can use and learn from.

Even the smallest thing can have a huge impact on your sales such as removing the “$” sign from your price points, which can cause a boost in sales and reduce price objections.

Conclusion

The next time you are given a hard time about your high prices, don’t give in! Instead, use the tactics above so you can charge the prices you deserve.

I want to know how the tactics above worked for you, so feel free to leave a comment with your findings or with any other way you handle price objections.

If you want to break through to real profits online, you need some serious firepower. For a limited time I’m sharing some select tips and tricks Amazon, Microsoft, NBC & Hewlett Packard paid thousands of dollars per hour for, FREE.
  • The step by step guide to monster traffic generation
  • The how-to guide for increasing conversions on your website
  • 7 Cashflow killers your analytics tools are hiding from you
     
 
100% privacy, I will never spam you!

Comments

  1. Nice post, Neil. Handling pricing objections are really interesting. First, you need to understand what the true objection is. Vetting out the real objection versus a veiled objection is the key to overcoming the objection. If Pricing is, in fact, the true objection, then understanding the prospect’s average revenue per new customer becomes critical to laying out an ROI/Value. Other things that help with overcoming pricing objections are: Case studies, payment terms, financial incentives, customer referrals.

  2. Great advice!

    Currently, I’m trying to create a few case studies, because I believe that a testimonials section on a website just isn’t cutting it. So your link was great.

    I also really like the way you write your sales pages. I been analyzing them for awhile know.

  3. Lots of good advice. I never had to deal with people pushing me on price too much yet for seo consulting work, but i try to sell the value hard from the beginning. Each business and case may be different, but personally I feel I didn’t sell the value well enough if the client is stuck on price.

    One thing I like to do is if I was to charge $1000/month for a 6 month contract and there’s a problem with price, I would go down to $850/month but require all 6 months upfront. So similar to a payment plan but if they want to haggle, I usually charge it all upfront.

    -Amir

  4. Hey Neil,

    Awesome post. I am a marketer at a pricing optimization startup! There is a ton more information on our blog about pricing for your business if you are interested. I think you hit the nail on the head about not giving in! a 1% price improvement can lead to a 10% increase in revenue!

    With that said, it is important to remember that price improvement is what we are after. There is a price point where you will maximize the amount of revenue your product brings in, and it may be lower than the price you are currently pegged at! what do you think?

    -Erik

    • Yep, it is important to make sure you are not undervaluing your product or services. You want to make sure you are at a price point that will keep increasing your revenue.

  5. tricky subject! Especially when its brought up by a potential customer. I am a car detailer based in Sussex if a customer challenges me on my prices I ask them to view my gallery and if they are not impressed after their car has been valeted (within reason) I wont charge them. This has never happened and I usually get tipped as they are so impressed. By offering a no charge service (not money back) I believe its a good incentive for a customer who isn’t 100% about your prices

  6. Great tips neil , i am creating case studies nowadays…..so that i can move to the second step

  7. Nice tips neil one should really make a plan on how to handle price objections and you explained it very well :) thanks

  8. You can learn more about some of the other drivers of price here:
    http://blog.priceintelligently.com/

    There are many factors to consider, Price stickiness, the difference between value and cost plus pricing, ect.

    Have a look!
    -Erik

  9. Great post. In the interest of sharing, I receive a newsletter on pricing strategy from http:\\www.holdenadvisors.com. They regularly have interesting insights based on the fundamentals of pricing theory using real world examples. I recommend it to anyone responsible for pricing.

  10. If objections are never raised then you never have to handle them.

    The best sales people are able to uncover and develop enough value in the client’s mind, that the objections are never really raised.

    If pricing objections are raised, then you need to make the client articulate why they say it is expensive. In order for something to be expensive it is always relative to something.

    Once the client shows you what they are comparing it to. You can then assist the client in making the pricing comparison.

  11. Thats some good info….I have been doing some of these things over the years with clients but not properly as it was all in my head. I think if I create a presentation of this information, particularly the case study and payment plans then it will help close a few more deals. Cheers

  12. Good post.

    I’d add that if you are launching a new subscriber-based product, its absolutely key to get the pricing right early on. If you undervalue your product early, its really tough to increase price without seriously irking many of your existing subscribers.

  13. Hi Neil,

    As usual thanks for sharing great posts with us. I am in the process of increasing my fees and I have been doing lots of research on value pricing and with this post on handling objections, I feel better prepared.

    Thanks

  14. Great post! Excellently written and it covers a lot of easy to implement solutions.
    If you think about it the reason that some customers are coming up with bogus price objections may be because of the sellers who artificially inflate the price in order to be able to discount it later on in the sales process.
    Unfortunately we’re not living in a perfect world :)

  15. Neil,

    Nice article! Going further on your explaining value point. You have to do this with almost everything you sell low or high price point. I recently wrote about how Groupon does this in their deals well and analyzed a particular deal. $45 for dinner for two ($110 value). Later on they pointed out this was a $65 disount and 59% off the original price. Moving further along in the copy they mention that the drinks included in the deal are normally $10 each and you get two of them. They do a nice job of shifting the comparison multiple times thereby reducing rejection each time. But it all goes back to explaining the value as you mentioned.

  16. Speaking about case studies why are the case studies on neilpatel.com still blank?

  17. Neil, there is an entire theory called multiple equivalent offers designed as responses to “your price is too high.”

    The basic idea is have a couple of dimensions to your service such as: price, speed of delivery and quality. If someone wants only a low price, then speed and quality might be lowered by the supplier, for example.

  18. Great timing Neil! I’m just finishing up a proposal for a potentially huge new client and I feel much more prepared for any negotiations. Thanks again.

  19. THANKS, Neil, for another TERRIFIC article! It certainly gives plenty to think about.

    Personally, I find it helpful, whenever thinking about pricing, to actually look through the list, one by one, of the various Willingness-to-pay (WPT) measurement methods. Often people just focus on a couple of methods, such as market data or testing a couple of pricing scenarios, – but overlook other methods that can provide valuable insight, such as actually asking customers, existing or potential.

    As an example: I bought some software for about $37 after a 30-day free trial. Honestly, I would have paid $100 easily for what it does. And I’d think I am not the only one. Besides, there isn’t really any other software similar to it. But has the company making it really done much WTP-wise? I honestly doubt it.

    Or another example: assessing price increases people are willing to pay till it reaches a tipping point when they are not willing to pay it any more. Especially if there are already dissatisfaction issues and/or available alternatives. A local fitness club where I used to belong is a prime example. They kept increasing fees, and members were tolerating it, until it reached a tipping point when members started to leave massively. Meanwhile, a new fitness facility opened that is many times better, offers so much more, and much lower rates. Or think of the Netfix fiasco last year.

  20. Hoom! Neil! I guess I’ll be taking the dollar signs off my website. Thanks for the tip! I think my prices are good enough as they are and am currently working on building up my blog with posts that revolve around how to best utilize the different parts of my services, functionality, issues that may come up with the platform my services run on, etc. I’m also doing some posting to reflect the values my business is built on plus giving a bit of recognition to those who have been helpful to me in business and personally along the way. This way my site visitors get some value out of what they find plus are left in know doubt that they are dealing with a real person. Great post! Thanks! Rock On!

  21. Neil

    Payment plans from my experience is the best way to do it, if the person cant pay all that money upfront then you give them a chance to pay it little by little, in certain amount of time.

    Free trial is not the best way because even if you give the person a free trial after they take their trial 90 percent of the time they will still reject the price

  22. MALWARE linked –

    Neil, my browser (Chrome) is detecting malware on Single Grain’s webpage. You’ve got a link to it up there on your blog!

    Not sure what’s going on, but not good.

    (I was only curious as to what line of business Single Grain were in — and now I still don’t know.)

  23. Hey Neil,

    One of the things that Derek Halpern at http://www.socialtriggers.com talks about is pricing one of your packages way too high for any one to buy so that they look at the next biggest package (which is significantly less costly) as a really good option.

    I have yet to try this out on my own so I have no idea how effective this is.

  24. Did anyone else get a malware warning when visiting Single Grain?

  25. Price objections may mean that would-be buyers aren’t convinced about the product yet. These are good points for convincing buyers. Let them know that the product’s quality is superior over other similar products, and that it boasts great customer services, accuracy, durability, etc.

  26. Nice article Neil I have tried using case study results when I had launched a WSO and it got a good response and did really well, the other points also are really good and will try them out.

  27. Great article … using a combination of the tactics during sales and in your marketing materials will definately help. We have recently adopted the reduced product for a lower price model (software solution). We then allow the customer to add on modules with each module having its own value proposition & ROI and it has assisted the sales process and reducd the sales cycle tremendously.

  28. This is another great post, Neil.

    I think most of the time we don’t convey the values that our products or services truly offer well. Some of the suggestions (case studies and how we are better than the competition) that you provided above does help us on this. Thanks!

  29. From my experience, the best tool from the ones you mentioned would be spliting up the payment into 2-3 or 4. That converted the best for me!

  30. Hello Neil,
    my example is much more modest..

    I was selling one making money on Youtube ebook several years ago and you would be surprised that $23 version was outselling $17 and $14.92 by a nice margin and there was no difference on the sales page!

  31. Hi Neil,
    As usual your post is great.
    I give them options with differential pricing having different advantages, they will see the value and go for the best. In this way we both benefit.

  32. Great post Neill as usual, difficult one for my business as we are trying to generate demand for the product, it’s a new concept. Introducing a new product is the hardest!

  33. Nice informative post Neil… it covers a variety of easy to execute points.. As per my experience ,payment plan is a better option, people get an opportunity to pay a small amount for a certain time period in case they are not able to pay the entire amount in advance.

  34. In the internet marketing niche, what I’ve discovered is that the products earning $500K on launch date and those taking $5K on launch date had to get such amount of money because of the buyer’s perceived value of the product.

    Plugins and even some popular softwares are successful (again) because someone took another person’s idea, re-made his plugin and got the best or better sales copy + proper distribution channel.

    PS: Sent you an e-mail hope to get a reply from you soonest.

    Sheyi

  35. There are businesses whose high prices are justified by the quality of their product and service. I have an SEO student who is an insurance agent who provides a very personalized service that actually ends up saving clients money, but seems more expensive up front. Yesterday after class, he gave a great example of using the points you list.
    On the other hand, there are the true scammers out there. There is a company that does web development webinars at hotels in cities. That company has been convicted of fraud in many states for their sales tactics and the prices they charge. They present the same kind of points you address above in their meetings.

    • Unfortunately, there are people out there trying to scam business. That is why it is important to really dig deep and look into a product or service before going through with it.

  36. I also found when I sent my site out to various friends of friends and other people that they weren’t interested in what you got for your money they were more interested in the actual cost of the service. So I therefore moved my price from the bottom of each service after listing what you got for each car valet to the top along with the amount of time taken. I then sent the site back out for review, came back much more positive

  37. Nice post Neil! We all have to deal with price objections in the course of doing business. Knowing how to counter these objections effectively can really help improve sales and using the tactics you describe above can help you get there. Explaining why your prices are high can help customers better understand what they are paying for and why the price is justified. Telling customers how much they’ll be saving as opposed to how much they’ll be paying is another great tactic because everyone loves saving. Payment plans work well in most cases too.

  38. Excellent post, selling is an art, and to master it, one needs to know how to price the product.

  39. That is why you should offer quality products if you want to charge those kind of prices, nice post Neil.

  40. Something that I will be testing again are keeping the higher price points but breaking it into installment options. I have used this in the past and it does work.

  41. all really great tips. but IME those people who complain tend to be a far bigger headache then they’re worth…i think you’ll agree neil

  42. Nice tips Neil..Regarding the Ebook, what we should do if we are not able to recover our money after offered a payment plan?

  43. Sometimes, it can be a bit more productive to simply let the naysayers go. This can be especially true when thinking longterm. Those you have to talk into something, require nursing every step of the way. It can be very time consuming.

  44. Hi Neil!

    Certainly dealing with the price complaints is really tricky and if you know what you offering and why your product is different from others you can define the customer why your price is high.

    Certainly, though get new points here as well. Thanks for sharing such a valuable information. :-)

  45. Neil,

    You present some good ideas for how to handle price objections and achieve a compromise or advantage with buyers.

    A few thoughts to consider: (1) Maybe some types of people just love to haggle while others don’t. (2) The price elasticity of demand is not consistent across all products and services, so neither is the degree of potential haggling. (3) A good company reputation, and differentiated products and services, change the context of negotiations since similar value won’t be found elsewhere.

  46. Hannah Hamilton :

    These are useful tips Neil, thanks. I do agree that price should be explained in customers. In that way, they will understand why they should grab the product and never make some objections again. On the other hand, everything will always depends on the product so if people want to make their business successful they have two things to remember: produce good products and follow the above mention. :)

  47. If you have a great product then your high prices shouldn’t affect someone looking for your services. Ive hired a webdesign company that charged a few thousand more than their competitor because they gave a better product.

  48. Excellent – every salesperson in my industry should read this. The number 2 reason for firing them, (after consistently missing their targets) is because they resort to giving stuff away to make the sale. I hate that!

  49. It is one of the main reason which causes any business growth. The points mentioned are very helpful to tackle the price objections. Specially second and fourth point will be the best options.
    Thanks Neil for posting.

  50. Hi Neil,
    This is definitely a very nice post on how to handle clients who complain about the prices being too high. I think case studies and testimonials are great way to put across your point to the doubting thomases.

  51. That’s some excellent info….I have been doing some of these factors over the decades with customers but not effectively as it was all in my go.

  52. Seems like nowadays haggling is becoming our second job. Great roundup of suggestions!

  53. Offering a high potential price, discount coupons, free coupons may be one of the best method.

  54. You have made it too easy to understand Neil. Sometimes pricing becomes the obstacle in getting more business. But with the help of this kind of tactics, it has become easier to attract customers with interesting offers.

  55. I’ve run into customers who said that $150 a design + copywriting service for a website was too much, or that $50 a blog post is exaggerated. Sometimes they won’t understand how much hard work is hidden behind that price, and that they’re going to pay for a quality product or service, not junk.

    What I tell service providers when their price doesn’t meet my wallet is a simple “The costs won’t fit my current budget, but we can discuss this again in the future, after some good save up time. ;)”. That creates a friendly atmosphere and won’t make the service provider feel like they’re not worth the money they’re asking.

    Besides, if a client cares about a certain service and just can’t afford it ‘right now’, saving up is a good option. The more we work toward a goal we care about, the more satisfaction we get. :)

    ~ Luana S.

  56. Hey neil,
    these are good suggestions to convince our customers. following these one will be able to satisfy his customers.

    thanks.
    Matt

  57. Hello!,,,,,,,,,,,
    Hi!,,,,Great post! Excellently written and it covers a lot of easy to implement solutions.Thank you so much for sharing,,,,,,,,

Speak Your Mind

*