The Revenue Architect

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How to not lose on price
www.therevenuearchitect.com

How to not lose on price

Don't lose at the one-yard line

Arnie Gullov-Singh
May 19, 2022
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How to not lose on price
www.therevenuearchitect.com

Losing deals because of pricing always feels painful because it seems like such an easy fix compared to structural things like feature gaps or timing issues.

You’ll know if you are losing on price when one or both of the following are true:

  1. One of your top two closed lost reasons is “price too high”. If buyers are telling you directly that your pricing is too high, your pricing is too high.

  2. Your top closed lost reason at your proposal stage is “customer stopped responding”. If buyers are ghosting you after seeing a proposal its because they either shared the proposal with their boss and got shot down or they were too scared to share it at all.

The good news about losing on price is that it means you have a solution that buyers need. You just need to help them justify it to their boss. The 4 steps to solving this are:

  1. Price within striking distance of comparable solutions

  2. Understand the impact each stakeholder is looking to achieve

  3. Capture each stakeholder’s desired impact in your proposal

  4. Offer multiple budget options

Price within striking distance of comparable solutions

While optimizing pricing is an actual science, you can’t optimize if you aren’t in the ballpark. Coming in 20% higher than the competition is usually ok as a starting point. Coming in 200% higher is not ok unless your market is new or opaque, in which case you aren’t likely to be losing consistently on price. Likewise, you don’t want to come in too cheaply unless you are deliberately using price to unlock a new market segment that was previously priced out of participating.

Understand the impact each stakeholder is looking to achieve

Every large purchase involves multiple stakeholders. At minimum you have a champion, who benefits directly from the purchase through productivity gains and an economic buyer or executive sponsor, who funds the purchase from their budget and cares about the business outcome. For a deeper dive into this, see my earlier post about the 6 different types of buying stakeholders and how to bring them into your buying process.

Capture each stakeholder’s desired impact in your proposal

This is by far and away the most important part of the proposal. While it is often hard to get an economic buyer to engage with a salesperson during the buying process, it is a certainty that they will review the proposal asynchronously and shut it down if it doesn’t speak to their needs.

As a long time economic buyer of everything from martech and salestech to HR and dev tools, I can tell you this happens all the time. I’ve lost count of how many proposals I’ve seen that are pages long, packed with product info yet don’t have a basic summary of the impact my team and I are looking for.

As with all aspects of sales, the solution starts with putting yourself in your buyer’s shoes and asking WIIFM?

Offer multiple budget options

When presented with proposals, the default reaction of most economic buyers is to say, “its too expensive”, or “we don’t have the budget right now”. Providing multiple package options at different price points and tying each package back to the impact the economic buyer is looking to achieve enables your champion to overcome the budget objection and get what they need without you having to devalue what you are offering with over-discounting.


Thanks for reading! If you found this email useful, please share it and if you got forwarded it, please consider subscribing! I write weekly about the common sales, marketing and leadership issues holding back startups from growing faster.

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3 Comments
Shreya
May 20, 2022

Loved this - it's very actionable! Re: proposals that are pages long, how many do pages would you recommend and how would you structure it? I'm thinking maybe a single impact page with corresponding budget option but would love to hear your thoughts on the kind of proposals that made you take the "Buy" decision instead of "Ignore".

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