Kosta_Konfucius

Sales Rep

Anchoring in Today’s Sales

As may of you know, anchoring is a well documented way to start the negotiating process in order to get the best price. However, I have never heard of any sales leader internally/online mention anchoring when presenting pricing to a client.

It seems we are taught to follow a "No you go first" negotiating style. where we confirm their budget and present pricing within it. Whether that's for selling a product or negotiating salary at a company.

I understand coming in high with a price may cause the client to ghost you, however if there is open dialogue I assume it will help reps sell at a higher price.

Is anchoring really not that effective or is this something more reps should be doing?

🤞 Negotiation

27 comments

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oldcloser

Arsonist

💀

Great post. I'm a huge fan of anchoring. I've gotten more comfortable over the years firing the first price early, in disco even. It gets the awkward out of the way. But I'll only do it when I've got a minimal threshold of buy-in and rapport with the room. There's no way I can put a metric on the level of either. Sorry, it's gut.

And I always attach a caveat. Like "The full suite is $600k, so let's see how much of it fits."

So, the price you've never ever even come close to selling it for is is lodged in their head. And the value construction project begins. I didn't read this anywhere. Not sure if it isn't a bit cheeseball or used-car-ish. But it's served me.

Sunbunny31

Politicker

Sr Sales Executive 🐰

If I don’t have enough information to be specific, I’ll provide a range, and ask if that’s what they expected, and where it fits compared to what they’ve heard from other vendors. I’m not afraid of our pricing, but I also want a good discussion- and that starts as soon as possible. I do tie discounts to specific factors to put a pin in why I’m offering a better price, but they are always tied to that anchor and levers we can pull to back off that cost (if needed). This is also based on gut and experience. Recently, had a very very large company balk at the price presented and decline to go farther. They got a lowball price from a competitor we know is pushing price down right now. I’m letting them go right ahead and take a bad deal - they lowballed themselves. And that very large corp? Known for being cheap and a PIA to work with. They could have run me around for a while - or I could qualify them out quickly and move on. I prefer to rip off the bandaid but also work with those companies that are serious about working with us and what we have.

oldcloser

Arsonist

💀

Big leagues right here, y’all. This kind of attitude will get a seller paid.

CuriousFox

WR Officer

🦊

Yup. You have to be ok with walking away. You badass 🐇

ChumpChange

Politicker

Channel Manager

Protect your time and your energy.

Sunbunny31

Politicker

Sr Sales Executive 🐰

It's one of the hardest things to do, but absolutely necessary - unless your company has a specific reason you need to stay in the deal. Communication with execs on your end is essential. If you need that brand or that vertical or that specific deal, that changes things, of course. I stay in step with my execs on any deal like this and overcommunicate if anything.

oldcloser

Arsonist

💀

You could teach a class on this part.

Pachacuti

Politicker

They call me Daddy, Sales Daddy

I like the "so let's see how much of it fits" comment.... will be using it.

ShavingsMakeAPile

Executive

Enterprise AE

Great topic!

1. Rightful price anchoring needs to emphasized more
- reps need to stop negotiating against themselves
2. Budget allocation is not as important as it used to be
- whether there is budget or not, solutions are all being scrutinized
the same way.
- there are 4 general 'value' buckets CFO's/Finance teams take into
consideration when evaluating the purchase of a solution.
3. Customers/Prospects ghosting has little to do with actual pricing and far more to do with there not being enough discovery/pain uncovered. - the value of the solution not being proved through enough.

The trick to #2 is checking as many boxes in those 4 buckets as possible and getting ahead of that scrutinization processby empowering your EB/Champion to sell internally.

- if no budget - nail down ROI/COI (cost of inaction) numbers & work
with your EB/Champion to put together a plan for reallocating what
is budgeted for. CFOs/Finance teams love this as it shows the EB
truly cares about the fiscal health of the company & is treating
budget allocation as if it was their own money.

If pricing becomes an early onset conversation, taking the pricing range approach of "we offer solutions in the ranges of $XX - $XXX. As a part of walking through your particular use case, we can hone that in to a more exact amount. How does that sound to you".

If they say there is no budget for that range, responding with something like "Completely understandable, especially in this economy. But I have gone through recent evaluations where there was no budget allocated and, based on the value we showed through ROI/COI analysis, the EB & I were able to put together a plan for reallocating budget that was already approved (for other products/additional headcount). These plans were well received by the CFO/Finance team and really highlighted how the EB cares about the fiscal health of the company. One EB even let me know they believe they got a promotion over another candidate based on the thoughtfulness put into that reallocation plan. How does that approach sound to you?"

In the case of a salary negotiation it's a tad different as every rep has a bottom line, so making that clear could save time for both the hiring company & the potential hire. The range example in that arena looks like "I have been entertaining salaries in the range of $XX - $XXX, all having different types of complete packages (options, relocation, signing bonus, etc.). As we go through the hiring process we can hone that in to a more exact amount, but $XX is the minimum I would be willing to accept as a sole base salary number. Is that in the offering range for this position?"

detectivegibbles

Politicker

Sales Director

Yep. Still relevant.

Do you walk into a dealership and say “I’d like to buy a car” and expect a down to the penny price?

Maximas

Tycoon

Senior Sales Executive

I believe it's a really good way to use when it comes B2C,where prospects have time to be pitched besides the word discount has a more magical impact on their ears than B2B ones.
Unlike B2B where time is strict, and everything needs to go through budget that always comes first to the decision makers which is pretty common in the business environment, so no matter how good at what you pitch or how special your product is, as long as it ain't fitting their budget it's a mismatch for them and makes em more likely to ghost you.
Besides they have a more product awareness than consumers in addition to they already know that you're calling to sell em (Haven't you heard what're you trying to sell me today pretty often:)
For all of the above reasons price needs to be kept for later after gathering your required info to build your sales tactic first, unless the prospect insists to know it too early that might let you lose the deal, then go for it and apply the anchoring technique!

oldcloser

Arsonist

💀

I'm not sure the word discount has less weight in B2B. Sale, special, package price, still work. So do names of sales events and limited supply and time frame. It's not the size of the price. It's how you use it.

Maximas

Tycoon

Senior Sales Executive

I agree, no one doesn't like discounts right.
However, what I meant to say though was since B2B are more savvys when it comes to the product and its features and how it would benefit their businesses, they don't tend to count on the discount only as a decisive factor in their purchase decision - or fall for it that easily - unless it was real with compared to the offered prices via competitors.
As for most of B2C biz I was involved in customers are more likely to buy for a discount you offered them without digging things further as long as they need your product they don't have to analyze the whole thing as in the B2B scenario, based on experience!

oldcloser

Arsonist

💀

I don't think B2C is very different from B2SMB. There's a lot of micro SMB out there. Dreamers, little startups. They're really just people anyway, not businesses. All of them are susceptible to being sold when you paint the picture for them.

'You wanna be the guy driving down the mountain with your convertible top down and NO MUSIC? Bro. It's $20/mo. Give me the card number already."

Maximas

Tycoon

Senior Sales Executive

Dude that's great, this is gonna be my new pitching script to the next prospects when selling em some music:)

oldcloser

Arsonist

💀

1st 5 use cases are license free 😁

Maximas

Tycoon

Senior Sales Executive

😅

FinanceEngineer

Politicker

Sr Director, sales and partnerships

I have found there are 2 reasons:

1. You don’t want to anchor under what the customer is willing to pay.

2. If you come in too high, you never get the counter.

So it’s more of a mitigation. I tend to ask for budget or what the customer is currently spending as a starting point.

CPTAmerica

Opinionated

President/CRO

I typically coach against holding out on sharing pricing. I want reps to have 2 prices ready whenever needed in a conversation.
1. Starting price (used for very early stage meetings when there's heavy pressure from the prospect to discuss pricing or we have a doubt that the prospect can afford our product)
2. Large range (used later once we know a little more about the prospect, their challenges but not ready for a proposal. They push for price we say "based on our conversation we are probably looking at something between $X - $Y just depending on how you want to configure the solution.")

I can't stand the idea of holding out on pricing. If they are asking, give them something.

Kosta_Konfucius

Politicker

Sales Rep

What about using an anchor when showing price?

CPTAmerica

Opinionated

President/CRO

For sure, that should be part of the thought process when creating your pricing model. Part of the 'large range' price idea is also anchoring the top end.

Pachacuti

Politicker

They call me Daddy, Sales Daddy

I like to discuss price as soon as possible and get their feedback as well as influence their budget. If I'm early enough I can dictate what the budget is.

Helping them with their expectations is a great way to get an unfair advantage over my competitors.

nolaydowns

Good Citizen

SAE

I think anchoring is great but you gotta set yourself up to deliver on their expectations. When you’re qualifying the client on what they need, you’re also affirming your value proposition - proportional to what they want to spend. That way they’re not gasping when they receive your quote.

RandyLahey

Politicker

Account Executive

Finally, a relevant post about sales technique, asking a specific question related to a desired outcomes. Nice work Kosta

Kosta_Konfucius

Politicker

Sales Rep

Everyone needs a code

RandyLahey

Politicker

Account Executive

RIP Mr. Williams...

kittychachas

Valued Contributor

VP/Director of Sales

I use anchoring quite frequently. We have our list price that we use when pricing comes up. When asked for volume rates we discount a fixed percentage based on deal size. Towards the contracting piece, we can expect some additional push back on pricing from procurement so we always have some wiggle room to further reduce.

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Kosta_Konfucius

Anchoring in Today’s Sales

27 comments

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