In the movie Tin Men starring Richard Dreyfus and Danny DeVito, an aluminum siding salesman goes into a car dealership to buy a new Cadillac.
“How much is it?” he asks the car salesman about the car he wants to buy.
“How much do you want to pay?” the car salesman asks back.
Disgusted by what is an obvious sales tactic, he replies sarcastically, “A dollar…I want to pay a dollar.”
Many of us won’t ask the prospect how much he or she wants to pay because we feel that it is somehow sleazy, and that doing so will create an uncomfortable situation.
But if you indeed did know how much your buyers wanted to spend, your sales closing ratio would shoot through the roof because you’d be quoting prices you knew they could afford and were willing and prepared to spend.
How do you ascertain what the buyer wants to spend without the awkwardness of asking outright?
When it’s time to discuss price, ask the buyer, “Do you have a budget?”
Note that you are not asking “What is your budget?” You are instead asking the much less threatening question, “Do you have a budget?”
The buyer can only give one of two answers: yes or no, with about half of prospects saying yes and the other half saying no.
If the buyer says “yes”, then you ask, “Would you mind sharing with me what your budget is?”
Those prospects who tell you their budget have just given you the range under which your price quotation must fall to be accepted.
But what if the buyer says, “No, we don’t have a budget.” Then you ask, “Well, do you have a dollar figure in mind of what you would like it to cost?”
Even if they do not have a budget worked out, many people, when asked the question in this way, will come back at you with an answer something like “I was figuring to spend around $1,000 and not more than $3,000.”
In effect, they really do have a budget—$1,000 to $3,000—but just never wrote it down or said it out loud before.
A few people, however, will not share their budget no matter how you ask. “I don’t want to give you my budget,” they will say. “I want you to tell me what it will cost.”
In such cases, use the “good, better, best” method of price quotation.
Let’s say you are quoting on selling the prospect a half-acre lot with a custom built home.
Instead of just quoting your top-end home, which is $500,000, you give the prospect three options to choose from.
The first option, which you call “good”, is a basic three-bedroom home with a fireplace and unfinished basement. It is $300,000—the cheapest you can offer while still giving the buyer a decent home and yourself a decent profit.
The second option, which you call “better”, is the same home, but with a finished basement and an added sitting room in the master bedroom suite. It is $400,000—your middle-of-the-road model.
The third option, which you call “best”, is the same home as in the “better” option but with top-of-the-line landscaping, a second fireplace, and a fourth bedroom. It is $500,000—your top-of-the-line model.
You outline all options for the prospect, including the prices. Then instead of asking him whether he wants a home, you ask him, “Which do you want—good, better, or best?”
This strategy increases the chances that your price quotation will fall within the dollar amount the prospect wants to pay.
Also, very few people want the lowest-quality of three choices. So some buyers who were looking to pay $300,000 will find a way to pay $400,000 (even if it means a bigger mortgage or borrowing from Uncle Joe) and more will select “better” over “good”.
Bob Bly is the author of “World’s Best Copywriting Secrets” and has written copy for more than 100 companies including IBM, Boardroom, Medical Economics and AT&T. He is the author of more than 75 books and a columnist for Target Marketing, Early To Rise and The Writer. McGraw-Hill calls him “America’s top copywriter”.