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Lesson Info

How to Talk About Money Without Fear

For a lot of people this is the scariest part of the conversation. My interest in SDRs, or sales development reps, and BDRs, business development reps, mostly revolves around two things. One, how do you get the commitment for time. And the second one, what they desperately want to do is avoid talking about price at an cost. Like I do not want to tell you something about pricing right now. It's too soon. And what they're afraid of is that, if I tell you what the price is you're gonna run away. And the fact of the matter is some people probably will run away. Depending on what you sell, what you sell they'll run away for sure. (audience laughing) Yeah, his price tags have lots and lots of zeros and commas at the end. But that's how some of us work. But you, what they try to do is the client says something like, or the prospect says, "Can you give me some idea of what the cost for us would be?" And they say, "You know, it's too soon to do that right now. I'm gonna have to have more discov...

ery. I'm gonna have to get more information. So I can't give you anything right now." And then the customer's experience of that is how high is their price that they can't even say it out loud? How afraid of their pricing are they that if I just hear it I'm gonna go screaming out of the room? I mean how high is this price? And it's probably not that high. It's probably in line with what other people do generally. But because we're so afraid of having that conversation the client thinks, well, I should probably just disengage with these people because it's more than I can afford. How do you know it's more than you can afford? We never told you what the price is. Yeah, but you won't say it out loud. So you need to be able to say something like, it's gonna be between $250,000 and $475. As we get closer and we have these conversations I'll let you know where I think we're gonna end up. And we'll try to find some investment that matches what your outcomes are. And see what we can do from there. Does that make sense? I gotta be able to talk about it. I think this running away from it causes people to think, you're really trying to get over on me. You're gonna take advantage of me. You're gonna tell me it's a million. And as soon as I push back, you're gonna go to 800,000. And I'm gonna have a $200,000 price reduction that I don't understand how that happened. So we have to have some integrity about these issues. And I would tell you, if you have a higher price it's a sword. It's a sword. It's a weapon. It says these people are better. And why are they better? 'Cause they can command a higher price. So, for human beings we like heuristics, or rules of thumb that we can follow. When something has a higher price, it tends to be better. And so that's the shortcut. Is it always better? No. Sometimes we're disappointed. But most of the time it means that there's greater care, there's greater trust, there's more money being invested. So, you don't have to be afraid of your price. And you can always give people a range. And if you wanna be playful, you can say something like, it's gonna be somewhere between 2,500 and 2.5 million. (audience laughing) But we may need to have more than one conversation to figure out what that is. Let me get you closer though. It's probably in the mid-range there somewhere. And you can be playful with it and have the conversation but you can't be afraid of it. And you have to be able to talk about this. If you hide your price you're destroying trust. You're saying that there's something here that's an obstacle to the relationship and I'm keeping it from you because I'm going to hold this where I have this knowledge that I won't share with you. So I have an advantage. That's what it feels like to other people. You do not want to destroy trust. That's the foundation of the relationship. So when you talk about it openly, you're fine. I don't feel like you're ripping me off. And if you say, "Our price is gonna be about 11 to 12% higher. And I'll explain to you, if you allow me to, why our customers think that that's the right investment to make in the better results they get, if it makes sense for you, you'll probably see that too. And there will certainly be lower priced options for you. Can I share with you what makes us different and why?" And I'm, I gotta get into that conversation. 'Cause that's the difference in pricing. How do you ask for the commitment to invest? You have to be able to talk about it openly. I would tell you early in the process. And we don't have the commitments all up here. But if it's early and I have a higher price, I'm gonna say something like, "Based on this initial conversation we have, I'm guessing this to be $400,000. It's gonna be right in that neighborhood. Is that tracking with what you were thinking?" And if they say, "Oh my god. $400,000," you know that you're way off. Or they're way off with the outcome that they want. But if they say, "You know we were thinking right in that neighborhood. We're hoping it comes in lower than that. We were thinking it's gonna be in the 350ish area. That's what we've invested in the past." Good. Then we're having a conversation. But you have to be able to have that conversation. And you have to be able to say, "Based on these outcomes, does it make sense to invest $400,000 in this particular project now?" You've gotta ask them. Does it make sense to invest the money? And probably earlier than you think. What a lot of sales people do that makes selling much more difficult for them, and a lot of people online watching this, we want to wait and withhold the pricing 'til we send over the proposal. And then it's not right. And it's out of line with what they were thinking. And we didn't have a chance to do anything about it because we held it for so long that by the time they got it they looked at it and said, "This isn't what we were thinking at all." It's better to get this conversation started earlier, fearlessly. You're gonna have objections. And I wanna tell you about pricing objections specifically. This is one of my favorite things. There is a certain amount of money it requires to produce a result. And you need your client to give you the investment that it takes to produce that result. That's how it works. Their obligated though to ask you a question. And the question is, can you sharpen your pencil? Can you give me a deal on this? That's the question. Is this the right price? Could you do this for 10% less? Whatever. Can I have a discount? Some people will just ask you directly, can I have a discount? Those are the questions that they're gonna ask you. Their obligated to ask you that. That's the part when people get a little nutty about this. They're like, they're always asking me for a discount. They have to ask you for a discount. That's their job. Their job is to get the best deal for their company. And they don't know if you're BSing them or not. So they look at it and say, let me just ask and see. I have a friend who had a deal, and the client said, "We're really gonna need to sharpen your pencil. You're way off." And he called me and he said, "What do you think I should do about this? I think I'm gonna tell them to," and then he said a whole bunch of things that I can't repeat here and won't. And I was like, "Yeah, that's one choice. We could do that. I mean. I don't know that the relationship withstands what you just said out loud but, you could do that." I said, "Why not just go to them and tell them the truth. Why don't you just tell them you're gonna lose $75,000. You need to invest an additional 120,000. And you gave them the exact right investment." And he said, "You want me to tell them what my margin is on the deal?" And I said, "Tell 'em the margin. I mean if you were gonna tell them what you were gonna tell them, definitely tell them what I'm telling you to tell them. 'Cause what you said was way worse than what I just said." And he said, "I don't wanna do that but I will." And he called and he said, "We're gonna lose $75,000 on this the way that it's structured right now. It's important for me to get you the outcomes that you said you needed. And to do that I need a $120,000 in margin to put everything in place for you to get you this reduction in your cost overall." And the person on the other line said, "I'm so sorry. We had no idea. We didn't know if your price was really high. If it was really low. So we just took a stab at it. And we just decided to push you and see what you would give us. We'll take it exactly as it is right now. We understand. Thank you very much." And they signed the contract for a million dollars that day. And I said, "Didn't you like my approach better than yours? (audience laughing) 'Cause your approach would not have ended up with a deal. I promise you that. In fact, it probably would have ended up with somebody never speaking to you again." But we get emotionally attached to this thing. But you have to be emotionally attached to how do I serve this person in this conversation. They're supposed to ask you for a discount. So they have to. My favorite thing that I learned from my friend Bob Burg, who wrote the Go Giver, if you don't know Bob Burg and the Go Giver, read the Go Giver. And Go Giver Influencer comes out next week. Bob is brilliant. And he tells this story about, he saw Zig Ziglar speak, bought his tapes at the end, and Zig had this question that he always asked people. Are you concerned about the price or are you concerned about the cost? It's a brilliant question. And I've loved to ask this to purchasing people because it's like talking to a dog. Like, their head goes on sideways. They're like, hmm. And they're confused. They're like, am I concerned about the price or the cost? And they're like, I'm concerned about the price. And then you go, okay great. So if I reduce the price but we don't get any of these outcomes, we're willing to give up the outcomes as long as you get the lower price? Because if that's the right way to serve you, we'll configure this in a way that makes sense for you but we'll end up giving up things on this side. They're like, no, no, no, no, no. I'm concerned about the cost. Okay, so, you recognize that investing more means that all these others challenges and all these soft costs go away. But you're gonna end up spending a little bit more. 'Cause it's price or cost. And we're confused. And some of them will say that. They're like, I think I'm concerned about both of them. Good. You should be concerned about both of them. This is the right price for this investment. And this is how I reduce your costs. So you have to educate people. And when Bob learned this and started asking it, I remember watching a view of him tell this story, and he learned that there was this script that the client has. The customer has this script where they say, can you sharpen your pencil? And then he knew to say, I'm happy to do that. But I'm afraid it won't get you the outcome. Can I go back and revisit what we're trying to do and why investment is necessary? And the first time the client said yes, Bob was like, yes. They know the script. They know the script on their side. They're following the script exactly. Because they know the script. They go through it over and over again. So when somebody asks if you can sharpen your pencil you just say, "Well I don't really have an pencils. But I'm happy to have a conversation about the value we create and the right investment. And let me see if I can help you with that." You have to be able to talk about it. I'll just give you one idea about this. The higher your price, the earlier you should talk about it. The earlier you should bring that in. Let people know what it is so you're having a conversation about the right thing. Even if it doesn't feel right to you. More money means bigger outcomes. Less money means lesser outcomes. That's just the way things work in the world. You never get a better outcome at a lower price. You get a better outcome by investing more in the result that you want. So you can't signal that you're cheaper. And I think the mistake for a lot of sales people is they wanna be cheaper. But then people immediately say they must not be creating a great result or they'd be able to command a higher price for it. When your price is what it is, you have integrity around it and you talk about it that way. We've done this. We've perpetuated the lie that you can have better, faster, and cheaper. So the question that you have to answer here, you have to justify the delta. What makes you worth paying more to obtain? And that's the differentiation. How are the results going to be different with you than with someone else? I gotta be able to talk about that. Is it that you spend more time? Is it greater care? Is it bigger outcomes? Is it the fact that your gonna invest in a different way, in a solution, to get them something they're not gonna get some other way? You have to be able to talk about that. I've got a client specifically that has a 3% net margin, which means they literally invest 97% of what comes in into their clients. They have 3% left at the end of the year. And they have a very successful business model doing that. But that's the truth of the matter. It takes 97% of the money to be able to generate that outcome. The truth about low price is that it makes it harder. And then I have one other thing, walk away. You gotta be able to walk away. My favorite thing I maybe learned at Harvard Business School was just a cartoon that they put up one day in a marketing class that said, "We're losing money on every transaction but we're gonna make it up in volume." (audience laughing) And some people think that that's a business model. You have to run a profitable business to be able to serve people. And it starts with you being able to explain that investment and differentiate it. Questions and answers. Say if you've made a commitment to a client that it's gonna cost x dollars. And now you realize that that custom solution is gonna cost a teeny tiny more, is it fair to go back and ask for the delta? Or do you just? Let's qualify teeny tiny. We're talking about B to C sales. So we're looking at, you know, $500 to $1,000 difference. That the initial product is 2,000. And now it, they're gonna look at 2,500. Yeah, yeah, that's a fair question. I would tell you, I think it matters how you do it. And I think at some point you have to have a conversation where you say, "We looked at this and we believe that we gave you bad information. We thought that this investment that we talked about was right. But it's not. And I'm still happy to keep this price for you, but it's gonna eliminate part of the outcomes that we talked about. And what I'd like to ask with you, ask you for if I could, is a chance to share with you why we'd like to ask you to invest just a little bit more, in this case about $500, and what we're gonna give you for that." I would go have that conversation and be honest every time. I would try not to walk away from that one because it was me, I did that, I under-priced it. But I would be willing to go back and have that conversation to ask. And to try to do that. Or if not, I'd try to find a way to do the best I could with what they gave 'cause I already gave them that. I committed to it. I would tell you the other side of that, the walking away that we mostly have to do is when someone doesn't value us. And in B to C, especially if you're an artist of some kind, there are a lot of people who think you're a commodity and they undervalue what you do. And so when they undervalue you and they say, "That is worth 500, not 2,500 to me," they're not your client. And you have to be able to walk away from them. And say, "I appreciate that. I know people who do this work for $500. And I will absolutely recommend a couple people for you who will do the very best $500 work you can ever see. But if you decide that you want something greater than that I hope I can ask you to come back to me and let me have another shot at trying to help you." You can do this in B to B too, but you have to do it in B to C. I think for a lot of reasons art is undervalued. I think so. In B to C. But I think that when you go super-relational it's gonna be valued more. When robots take over and they make everything, having something made by hand's gonna be special. And I think it's special right now. But I think that's what's gonna happen. I think that we're gonna decide that we like relationships more. Do you find that sometimes people bring price up and that's really not the objection? And if you don't ask them to tell you more about what it is about the price, that sometimes it's really about their, maybe it's the timing of the budget? So sometimes we end up trying to compete on price and yet there's other ways of really solving what's the primary issue? And without talking about your company and what you do, I just have to make sure people understand that when he asks a question, it is the most complicated thing you could ever buy on Earth and potentially the most expensive. And the one that probably has the biggest impact on a business overall because of what it is. So there's something to that. So a lot of times the pricing can be masking some other objection. And that objection could be, I'm not sure that this is gonna work. And they say that just to get a conversation started because they're pushing back to see what's there. But it also could be in your world, specifically, only because I know your business well enough to know when I tell you what the budget is, you're like, not in one year. It's not, that needs to be over a number of years, right? And it's because of the investment that you're asking them. And so it could be a concern. There's a couple ways to think about that too. I mean there's, if you know that's gonna be the case you can start off by preempting that conversation to say listen, when I show you the price, we're gonna work out an investment vehicle that works for you. So don't worry about that. Don't worry about having to have all of it upfront. We're gonna work it out. So they know like, okay, okay, I can relax now. And I can get into this conversation because I know there's gonna be a solution eventually.