Price Objections: What "The Price Is Too High" Really Means

My friend's baby looked like a cross between Gollum from Lord of the Rings and a Troll doll.

When I met the little guy—and I'll admit, I lied—I said, "He's so cute!"

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Don't judge me, you know you would have done the exact same thing! As humans, sometimes we avoid telling others the truth in order to not hurt their feelings.

Buyers do this to sales reps every day. We've all been there. You've been working on a deal for months, and now that you can see the finish line, your prospect comes back with some variation of "It's just too expensive," "We don't have the budget right now," or "the price is too high."

It's the business version of the classic breakup line: "It's not you. It's me." And it's rarely the truth.

But since you have nothing better to report, you open up the CRM, select the "Pricing" option in the "Closed lost" field, and close out the opportunity.

Over time, those closed-lost opportunities stack up. Eventually, someone runs a CRM report in an attempt to understand why you're winning and losing deals, and they see that a huge percentage of losses are being attributed to "Pricing."

But what does that actually mean?

Does it mean a competitor is undercutting your pricing? Or that you need to offer coupons and discounts? Is your pricing model too confusing? Are you offering buyers too many options during the sales process? Maybe it takes you too long to deliver pricing options to the buying committee. Or maybe there are six other reasons your buyers don't purchase from you.

In each of these cases, pricing is simply the easiest and most palatable excuse a prospect is willing to offer your sales rep.

Without a better understanding of what pricing really means, you're left to build your sales strategy based on guesswork and assumptions. 

At Clozd, we've had hundreds of these conversations directly with buyers who walked away, and one pattern holds up again and again: raw price is almost never the real reason a deal falls apart. "The price is too high" and "it's too expensive" are buyer shorthand for something more specific. Here are the five most common things buyers actually mean when they raise a price objection.

"Clozd helps us better understand a variety of factors in our sales motion, including product feedback, pricing and packaging, sales process efficiencies, and general competitive intelligence." Nick Roco | Senior Manager of Partner Strategy and Operations at Dataminr

1. Clarity: When "The Price Is Too High" Really Means "The Price Is Confusing"

For many buyers, the problem is not so much that the price is high, but that it is unclear. They want to understand the structure behind the quote - that is, how you got to the price you gave them. To provide this clarity, you need to communicate effectively and transparently, avoiding the pitfalls of excessive discounting/price fluctuation and hidden fees.

Written and verbal communication should align to show the buyer a clear picture of what the price is, how the price is built, and what they will actually end up paying. 

For example, you may have marketing materials that neatly lay out pricing for your different services; but, if your sales team starts talking about exceptions, startup fees, and usage-based fees, the customer can quickly become confused.

If a one-size-fits-all price does not fit your business model and you must use conditional fees, make sure to explain why this pricing structure is better for the customer. Also, help them get a picture of what they will actually be paying by breaking down estimates into their component parts. This is especially useful if you provide them a few different quotes based on likely usage scenarios, clearly explaining how each quote is built.

Finally, avoid used-car-salesman tactics like starting with an unreasonably high price then deeply discounting to get to the buyer's comfort level. The buyer may be pleased with the lower price, but they are also left wondering about your honesty - and whether you even have a clear idea of the actual value of your product.

2. Packaging & Fit: When It’s The Wrong Package, Not Wrong Price

We find that many buyers start out saying "the price is too high," only to reveal after some conversation that the way the solution or product was packaged (i.e., the elements included in the price) was actually not a great match for their needs. If they feel they're being forced to buy features or services that they don't need, they're going to be reluctant no matter the price.

Imagine you walk into your favorite burger joint. You're on a budget and all you want is a burger. What if they only sell burgers as part of a combo meal with a drink and side? You might be frustrated and walk out without making a purchase, all the while complaining that eating there is just too expensive. To win your business, do they really need to lower the price of a combo meal? Probably not. They just need to package their products differently.

This can be a simple matter of the size of the offering. If a buyer is looking for a quick fix for a simple business problem and all you offer is a premium product with all the bells and whistles, it's going to be difficult to get your price down to a point that makes sense for them. So when they tell you "the price is too high," what they are really saying is "your product is way more than we can handle right now."

The license model doesn’t fit their business

A company's licensing model is another common roadblock during pricing conversations. Buyers may disguise this as too expensive, but in reality, the pricing model just may not be conducive to the way they operate.

For example, a SaaS company changed its pricing structure from a concurrent licensing model to a per-seat model. Previously, licenses were determined based on the number of users that were able to simultaneously access their product. This helped ensure that each license was used at 100% capacity. After changing to a per-seat model, each license required a named user. Buyers became frustrated because they had to purchase individual licenses for users that rarely used the product.

Through buyer interviews, this client learned that the license model was a point of frustration for their buyers. Buyers actually preferred a tiered licensing model because it provided more options to fit each user type. It was the licensing model—not the actual license fee—that was the issue.

Here again, the right fix is probably not lowering your price. Instead, look at your packaging - you could benefit from adding some flexibility to the size, term length, and feature set of your offering. At the same time, you might consider tightening up your lead qualification process, focusing on buyers whose needs really fit your product or service.

People don't like buying things they won't use. Sometimes companies, in an effort to make their product more compelling, add in features buyers don't need or care about — which leaves the impression they're spending more than they should. Packaging correctly means always offering a bare-bones option.

3. Perceived Value & ROI: When They Can't Justify the Spend

It's important to remember that B2B transactions are never just about money. Whether your price is lower than, higher than, or on par with the competition, you need to have a value proposition that justifies that price level in the customer's mind.

If your price is high, you need a compelling narrative for why your offering adds value that outweighs the extra cost. Often buyers have a budget that can easily accommodate the most expensive option, but that doesn't mean they are willing to pay a premium unless they can grasp the added benefit.

"That's usually a cop-out answer that really means, 'I don't see the ROI in this or couldn't convince my CFO that there was an ROI.' CFOs aren't dumb. If their money can make them more money, they'll spend it." Brady Tengberg | Director of Revenue Strategy at Clozd

There's often a disconnect between what your sales team is saying and what the buyer is hearing — especially when it comes to a product's value proposition. Buyers place value on solving their current problem or need, and that value gets compared directly to the price point on the table.

It also helps to take the buyer's perspective in considering not just the quoted cost, but the Total Cost of Ownership (TCO). This includes switching costs, change management, and any future added work that the buyer may have to do as a result of making the purchase. TCO means that in many cases you need a value proposition that goes above and beyond simply justifying your contract price.

Finally, you need to be sensitive to the needs of the individual buyer within his or her organization. Making a big purchasing decision requires the buyer to use a lot of political capital. The clearer your pricing and value proposition, the easier you make it for the buyer to get the necessary buy-in for the purchase.

4. Pricing Model Risk: Will This Price Still Make Sense as They Grow?

Sometimes a company's pricing model just doesn't fit with a buyer's expected growth.

One buyer we interviewed was totally fine with the vendor's current price. At the rate the buyer's company was growing, however, the vendor's pricing model quickly became cost-prohibitive. Without reassurance or clarity on how the price would change over time, the buyer simply concluded that the product was too expensive. What they were really saying was: "There's a risk that it will become too expensive in the future."

The way a pricing model is presented and explained signals to the buyer how much risk they're taking on by signing up. Companies that design and communicate a relevant pricing model for their market win more deals and grow with their clients. Conversely, we see that companies who fumble on this principle struggle to retain or gain new customers.

Learn more about this by checking out our pricing strategy guide.

5. Competitive Positioning: When The Quote Isn't in the Right Ballpark

In-depth buyer interviews often help you get a better understanding of your competitors' pricing strategies. This awareness is vital when providing an initial quote to a buyer. If the initial quote isn't competitive, most buyers will eliminate that vendor out of hand, without even trying to negotiate the price. 

While some buyers may freely volunteer the price of competing vendors, sales reps must be prepared to deliver a price that's in line with the competition. If companies are unable to do this, buyers will begin to label them as too expensive.

Price Too High? Look Past the Number

Price is a vital piece of understanding why deals are won or lost, but it can also become a distraction if not put in the proper context. Sales reps in particular tend to over-emphasize price as the determining factor in a loss. While they may be right, you need to dig deeper to understand which dimension of price is really behind the objection: clarity, packaging and fit, perceived ROI, pricing-model risk, or competitive positioning.

By understanding what "too expensive" really means, sales reps can make adjustments to their messaging and turn pricing into an advantage as they seek to convince each buyer of their product's value. When the pricing model fits the buyer's business operations, projected growth, and market expectations, a company's price can drive commitment and secure long-term customers.

Putting price in the proper context is a critical step in reducing lost deals and improving your close rate. 

Need help understanding what's really behind your price objections? Clozd conducts in-depth buyer interviews that uncover the real reasons deals stall. including the ones hiding behind "the price is too high." Request a meeting with our team to learn more.