Image Description

Negotiating Price

This lesson is a part of an audio course 15 Sales Stories That Work by Paul Andrew Smith

One of the most common objections a salesperson gets is about the price. So, you often need a special story just to help your prospect get over price as a barrier. Here’s a great example from Melissa Moody, founder of the Excel modeling and talent agency.

Melissa says there’s a saying in her business that goes, “If you have to pay for anything upfront in this industry, it’s a rip-off!” That’s because most agencies work as a broker to match aspiring models and the companies that want to hire them. Then the agency gets paid on the back end after the model signs a contract.

But that’s not how Melissa operates. She charges her clients upfront. And the reason is her company doesn’t just match models with companies. She trains her students in modeling, acting, professional etiquette, and the business side of the industry. And Melissa personally takes them to competitions in New York, Los Angeles, and Paris every year to get experience.

So it’s understandable that she needs to charge her students for those services. But still, she often gets the objection that “I shouldn’t have to pay for anything upfront” from a potential client, which is typically a 14-year-old girl accompanied by her mom.

So, when that happens, Melissa has three responses. First, she asks them to look around the office. “What do you see? How do you think I pay for the classrooms, the furniture, the lights?” I’m not just some broker working with a computer and a phone in my basement. I have a business to run here.

Now, sometimes that works. Sometimes it doesn’t.

If it doesn’t work, she asks mom, what do you do for a living. “Oh, good, you’re an accountant. Because I really need my taxes done. But I don’t want to pay for it unless I get a refund. Will you do them for me?” Of course not.

Sometimes that works. Sometimes it doesn’t.

And if those two responses don’t resolve the objection, Melissa pulls out her biggest gun: a story. This story is about Kristine, a 17-year-old girl who came to Excel just a few years ago. She had the makings of a world-class model and became one of Melissa’s best students.

Well, during one of the annual New York competitions, Kristine came in first runner-up out of over a thousand young women. Back home the next week, she got an unprecedented 42 callbacks from agents and clients. Melissa helped her pick the best opportunities and Kristine and her parents were off to New York again to sign a deal.

The day of the big meeting, Melissa got a call from Kristine, who was on her cell phone, sitting in the backseat of a cab heading to the client’s office to sign the contract. Kristine was in tears. She was having second thoughts. Being a model was never really her idea. It was her mom’s. Kristine wanted to be successful—just not as a model.

She said, “Melissa, I graduated at the top of my class. I don’t want to make my living off my looks. I want to go to business school and run a company, like you. What should I do?”

At this point, Melissa stops telling the story and explains how she would have answered the question if Kristine hadn’t paid upfront. “I would have told her, ‘Look, Kristine, I’ve got $15,000 invested in you and a contract. Now you get in that office and sign those papers so I can get paid!’

But because I don’t work that way, what I actually told her was this: ‘Kristine, follow your heart. Come home and pursue your dream.’ ” And that’s exactly what Kristine did.

Now, I think there are a couple of lessons here. First, Melissa knows her biggest and the best weapon is a story, not a fact or an argument.

Second, this particular story allows her to highlight the benefit of her pricing policy for the customer, not for her. That’s very different from her first two attempts. The need to pay for lights and furniture is a reason Melissa needs to charge a fee upfront. The analogy of the free tax service also explains why Melissa needs to charge upfront.

But the story about Kristine shows a benefit to the student. Paying upfront gets you an agent who has your best interests in mind and keeps you out of a commitment you might not want to have later on. As far as Melissa’s concerned, anything less would be a rip-off.

So, if you find yourself regularly defending your pricing, think of a similar story about how the price you charge is good for the customer, not you. What would happen badly for customers if they paid less and your product was commensurately cheaper in quality?

Alright, we’re ready to move on now to closing the sale. So, the next couple of lessons include stories to help with that phase of the sales process.

Image Description
Written by

Paul Andrew Smith