Fireside Chat: All About Pricing
Whenever you're selling something online; whether it's your product or a referral you're making as a Kajabi Partner, you're going to inevitably encounter this objection:
“The price is too high!”
Now, the first time you hear this, it might throw you for a loop. You might even feel tempted to lower your price or offer a discount in response.
But the fact is, it doesn't matter what your price is.
Price objections will always happen.
In this post, we're going to equip you with everything you need, not only to address price objections confidently but to understand why they come up in the first place and what they mean for your business.
A lot of business owners get tripped up by price objections, but once you understand why they happen, you'll begin to realize that they contain valuable information. More often than not, they're a good thing.
Truth be told, If you're not getting price objections, you're probably not charging enough.
What a price objection actually means.
Prospect #1 is super enthusiastic about the product, almost from the beginning. They love your story and are excited about all the problems the product solves. But when the price comes up, they say things like, "Do you have a payment plan?" and "I just don't have the money right now."
Prospect #2 is interested, but a bit more discerning. They ask a lot of questions about the various features, the guarantee, etc. When price comes up, they say, "This all sounds good, I just wish it wasn't so expensive."
Each prospect has just given you valuable information about your offer.
Each one needs something to change before they can purchase, and it's not the price.
If you hear lots of price objections like those of Prospect #1, you likely have a qualification problem inside your funnel. Some aspect (traffic source, copy, etc.) is attracting the wrong sort of prospect for your offer.
It's like you're selling a 25K per month mastermind to people who are trying to make their first 1K online. No matter how much they see the value of what you're offering, they can't afford it. It's a simple mismatch between the message and the market.
Prospect # 2's objection tells you something completely different. The fact that they've asked serious and specific questions is a reliable indicator that they're considering a purchase, but they're struggling with the choice to spend the money.
That kind of objection is actually good news!
It means this person is at the point where they've connected emotionally with the purchase (they want it), and they're looking for a way to justify it logically.
Key takeaway: The buying decision happens emotionally first, and logically second.
All of us like to think that we, ourselves, are rational when it comes to what we purchase.
But in truth, we get emotionally attached to the product first and then look for logical reasons to bolster our buying decision, and to assuage the discomfort of parting from our hard-earned cash.
Your goal now is to make those logical reasons crystal clear, to help them justify doing the thing they already want to do.
We'll talk about how to do that later in this article, but first, let's address something else that people always ask about when it comes to price objections: offering discounts.
Discounts: Do's and Don'ts
For lots of business owners, their first move when they get a price objection is to think about lowering their price or offering discounts.
It seems like the logical thing to do - someone says they like your product but won't pay the price - so let's lower the cost and they'll become a customer, right?
But you can get into a hazardous cycle offering discounts.
Let's avoid that, shall we?
First of all, discounts can be beneficial when you're in the beginning stage of your business, to help you get that first group of customers you need to get good testimonials for your products.
But the first problem with discounts is that, while they can help you make those crucial early sales, they don't do a great job of attracting your best customer.
Your best customer is someone who is motivated by the value of your product. It solves such a pain point for them that they'll buy with or without a discount.
A customer who needs a discount to push them into the purchase can likely take or leave your product. It makes them less likely to stick with you long term or make purchases from you at full price.
The other problem with discounts is that when you overdo it, your audience learns to expect a discount on every purchase.
That might be fine if you're a big-box retailer, and discounts are part of your business model. It's not a great place to be if you're an online expert, influencer, or entrepreneur. You want to get to the place where you're confidently doing full-price offers.
How do you know when you're at that place?
Simple: when you've refined and improved your product with customer feedback, and it's getting successful results for your customers. At this point, it's time to hone in on your best customer and move away from offering discounts.
After all, your best customers are the ones who will give you the most compelling case studies and results, which you can use to drive future sales. It's a win-win.
We're at this stage ourselves here at Kajabi — we recently stopped offering promotional discounts (outside of the discount you get for signing up annually vs. monthly).
That's because we want the people who buy Kajabi to be the ones who are serious about building a lasting business. They see the value of Kajabi so clearly that discounts don't matter. Those are the people who stick with us over the long haul. That's our win-win.
Remember: No matter where you're at or what you charge, you will ALWAYS get price objections. That's why it's crucial never to lower your price to appease people who aren't your best customer. You'll only end up with more of the kind of customer who isn't all that good for your business.
Now let's talk about how to respond to the person who is close to the purchase emotionally, but they still think it's too expensive.
Here's how we give them the logic they need to justify the purchase:
Create a crystal clear value proposition.
If you can be the person who makes an overwhelming decision seem so simple and easy, you'll not only make the sale, but you'll transform how your prospects feel about the sales process (which they're expecting to feel icky — it doesn't have to).
The key is to educate towards the sale, rather than convince.
Let's say you're making a case for trying Kajabi, and you've already laid the groundwork for the emotional part of the buying decision based on what you know about your audience.
- For any engaged audience, giving your case study that highlights results in your own business is always compelling.
- If you've got an audience full of seasoned creatives, you might talk about your favorite features and why they make a difference to you.
- If your audience is full of people just getting started, you can emphasize ease of use, removing technical hurdles, and no messy integrations.
For the logical part of the equation, one of the easiest ways to illustrate value is to draw a direct and concrete comparison between Kajabi and the alternative.
- Direct - create a comparison between precisely what your prospect would be using otherwise.
- Concrete - this is the time to use hard numbers, rather than plays to emotion.
So let's continue using Kajabi's offer as our example:
A serious online business owner understands that they need certain types of software to run their business: email marketing software, hosting, etc.
The alternative to Kajabi is using a bunch of other software tools, separately (we call this the "Frankenstein Method").
Your crystal clear value proposition could be with stacking up all of these software tools they'll need, the average monthly cost of each one, and then the total:
We can see clearly how that stacks up against the monthly cost of Kajabi, which contains all of these tools in an all-in-one platform. (Download the full PDF here)
Your prospect can see how much they're getting with Kajabi, for less than paying for all these tools separately.
Remember, you're providing this breakdown at the point where your prospect already understands, emotionally, that Kajabi is the solution to their problem.
The cost breakdown provides the concrete logic for deciding to buy Kajabi over the alternative. This logic is especially important because after the purchase goes through, emotions will fade, and rational reasoning is what will keep them feeling good about the purchase and moving forwards towards success.
That means they're more likely to build a successful business, you have a profitable referral as a partner, and Kajabi has another happy customer. That, my friends, is what we call a triple win. The sweetest of wins.
So to summarize:
- Don't balk if you're getting price objections to your offer. They happen, no matter what.
- Listen carefully to what your audience is saying about the price.
- Remember that the buying decision happens emotionally first.
- Educate towards the sale, rather than convince.
- Respond to price objections with calm, concrete logic.
We hope after reading this article that you're feeling more confident about how to handle price objections, and that you're able to use what you've learned here to get more sales, referrals, and signups from your ideal customers.
And if you're not already a Kajabi Partner, what are you waiting for? Get 30% lifetime commissions for every referral you sign up to Kajabi. It's a pretty awesome way to add a recurring revenue stream to your business, just by spreading the Kajabi magic.
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