Why Do Customers Think You’re Expensive?

One of the most common objections a business will hear from a prospective customer, or a flailing sales person, is that it's too expensive.

And one of the most dangerous things a business can do is believe them.

Because when a salesperson comes back saying they're losing deals on price, the immediate reaction can often be to start looking at ways to become cheaper. Cut the price, reduce the cost of delivery, strip something out of the product or service. Anything to get the sale over the line.

But that's a potentially bloody expensive mistake to make.

Because being told you're too expensive doesn't necessarily mean you're too expensive. 

It could mean something entirely different, and until you understand what that is, making changes to your business is just throwing shit at the wall and hoping for the best.

So before you start giving away your margin, let's look at what might actually be going on.

1. Maybe You Really Are Too Expensive

Let's deal with the obvious one first.

You might genuinely be charging more than the market is willing to pay.

If you're positioned at the premium end of your category, you need to understand whether there's sufficient willingness to pay at that level. Are there enough customers prepared to spend what you're asking, and can you demonstrate why they should?

Because being expensive or premium isn't necessarily a problem.

Premium brands exist precisely because enough people are willing to pay more for what they see as greater value. There's a reason wealthy individuals and businesses employ super  expensive lawyers when there are plenty of cheaper ones available.

They're not necessarily buying more legal hours. They're buying confidence, reputation, expertise and the reassurance that they've got the best possible people protecting their interests.

The higher price is justified by what the customer believes they're getting in return.

So take a proper look at your market. Understand what competitors are charging, how you're positioned against them and what customers actually value.

If there's a market for your premium offering and customers understand why it's worth paying more, brilliant. You've earned your place.

If you're charging premium prices but look exactly like everybody else, you've got a problem.

And cutting your prices isn't necessarily the answer.

2. Your Customers Can't See the Value

I'd say this is more often than not the underlying problem when businesses are told they're too expensive.

They haven't done a good enough job of explaining what the customer gets for their money.

Too many businesses describe what they do, how they do it and what it costs, without properly explaining why any of that matters to the person buying it.

So the customer is left comparing the price against an activity rather than an outcome.

Let's say your business provides a service that will save a customer £50,000 a year in energy bills. The service costs £10,000.

You could present that as a £10,000 service, explain all the technical details, describe the process and hope the customer appreciates what you're doing.

Or you could explain that investing £10,000 could save them £50,000 annually, delivering a £40,000 net benefit in the first year.

Same service. Same price.

Completely different perception of value.

Of course, you've got to be able to evidence that saving. Making promises you can't deliver is a fairly shit approach to business. Though that doesn’t stop the grifters from doing it.

But the principle stands. People buy what your product or service will do for them, not the work involved in delivering it.

So start by understanding what your customers actually want.

Speak to existing customers. Ask them why they chose you, what problems you solve and what they consider most valuable to them.

Speak to prospects who've decided not to buy. Find out what they didn't understand, what they expected and why they thought your price wasn't justified.

You might discover that your offer is absolutely worth what you're charging.

You're just doing a terrible job of explaining why.

3. You're Giving Customers No Reason to Choose You

There's another problem closely related to perceived value, and that's how your business is positioned against the competition.

If every company in your category looks and sounds exactly the same, why would anyone pay more for yours?

Think about how many B2B businesses describe themselves as experienced, customer-focused, innovative or committed to excellence.

Fucking wonderful.

So is everybody else, apparently.

When buyers can't identify a meaningful difference between suppliers, they have no option but to compare the things they can understand.

And price is usually the easiest.

You've basically trained your potential customers to treat what you sell as a commodity.

That's not necessarily because the products or services really are interchangeable. It might simply be because you haven't made the differences clear enough.

Perhaps your business reduces risk. Perhaps your technology makes implementation easier. Perhaps your people have specialist expertise that's particularly valuable to a specific type of customer.

Whatever it is, you need to understand whether customers value that difference and make it clear in how you present your business.

This is where proper market research and positioning come in.

Not sitting around a meeting room inventing a clever strapline, but understanding what customers need, what alternatives they consider and why your business might be the better choice.

Because if you compete on exactly the same terms as everybody else, you shouldn't be surprised when people choose the cheapest.

And that's a bloody difficult place from which to grow market share.

4. Maybe They're Not the Right Customer

Now, here's something sales teams and business owners need to get comfortable with.

Not everyone who rejects your price is a lost sale.

Some people were never going to buy from you in the first place.

They might not have the budget. They might not have a genuine need for your product. They might be researching options for a purchase that's months or years away.

Or they might just be the complete wrong customer for your business.

If you're selling a premium service designed for complex businesses with heavy lifting requirements, somebody looking for the cheapest possible basic solution probably isn't your ideal customer.

And that's fine.

I've seen salespeople take a no as evidence that there's something wrong with the product or business, when the real problem is that the prospect was never a suitable buyer.

It's important to distinguish between people who genuinely need what you're selling but don't understand its value, and people who have no reason to buy from you at all.

There's also the question of timing.

A potential customer might fit your ideal customer profile perfectly but have no immediate requirement. They could become a valuable customer in the future, provided they remember you when that need arises.

That's why building awareness and future demand matters alongside generating immediate sales.

And then there are the tyre kickers.

People who enquire, compare prices, ask for proposals and consume your team's time with little or no genuine purchase intent.

You could spend a fortune trying to convince them you're worth the money.

Or you could spend that effort on customers who are actually likely to buy.

I know which I'd choose.

Diagnose the Problem Before You Sacrifice Your Margin

Ultimately, your objective as a business is to sell your product or service to as many suitable customers as possible, as often as possible, for as much as they'll reasonably pay.

Profitably.

And you can't do that if every price objection sends you rushing to offer a discount or rethink your pricing strategy completely.

So before changing anything, start with diagnosis.

Look at your competitors and understand where your pricing sits within the market. Speak to customers and lost prospects about the value they see in your offering. Evaluate whether your positioning gives buyers a valid reason to choose you.

And make sure your sales team understands the difference between a genuine price objection, a failure to communicate value and a prospect who was never going to buy in the first place.

Don't build your pricing strategy around a sample of one.

You are not the customer, and neither is your salesperson.

What matters is how the wider market perceives your business and whether that perception supports the price you're asking.

Because there's a very real danger in making price reductions your default response.

Once you've trained customers to buy from you on price alone, it becomes incredibly difficult to persuade them to pay more in future.

You can always introduce a discount. Getting that margin back is much harder.

Unless you're fucking Netflix or Disney+, apparently, where putting prices up and seeing how many subscribers you can afford to lose seems to be part of the business model. And then throwing in ads too. Anyhoo, I digress…

Most businesses don't have that luxury.

For most of us, protecting margin means understanding the value we deliver, communicating it clearly and targeting customers who are prepared to pay for it.

So the next time somebody tells you you're too expensive, don't reach for the discount button.

Find out what they actually mean.

Because the problem might not be your price. It might be that you haven't given them a good enough reason to pay it.

Right. The Obvious Questions Answered

What should I do when a customer says my prices are too high?

First, find out what they actually mean. Are you genuinely outside their budget? Do they think a competitor offers the same thing for less? Or have you failed to explain why your product or service is worth what you're charging?

These are three different problems requiring three different responses. Speak to customers, investigate lost sales and understand the objection before deciding what to change.

Immediately offering a discount might win you the sale, but it could also mean giving away perfectly good margin to somebody who would've paid full price.

How do I know if my business is genuinely too expensive?

Start by understanding where your prices sit against the competition and whether customers see enough value to justify paying them.

Being the most expensive business in your category isn't necessarily a problem. Premium businesses can charge more because customers believe they're getting something worth paying extra for.

The problem comes when your prices are higher but customers can't identify any meaningful difference between you and the cheaper alternatives.

Don't base your pricing strategy on one disgruntled prospect or an opinion from your sales team, and don’t base it on what you think or know. Research the market, speak to actual customers and establish whether your pricing reflects the value they perceive.

How can I justify charging more than my competitors?

By giving customers a reason to pay more that actually matters to them.

If your service costs £10,000 but can save a customer £50,000 annually, the conversation shouldn't be about the £10,000 cost. It should be about the £40,000 first-year net benefit.

The same principle applies to expertise, reliability, reduced risk, convenience or anything else your customers genuinely value.

You need to understand what matters to your buyers and make that benefit clear. Because simply saying that you're better than everybody else is meaningless.

And every bugger says that.

Should I lower my prices if I'm losing sales to cheaper competitors?

Not until you've established that price is genuinely the reason you're losing.

If customers can't distinguish between your business and the competition, they'll naturally gravitate towards the cheapest option. That's often a positioning problem rather than a pricing problem.

And cutting prices to compete can quickly become a race to the bottom, particularly when your competitors decide to do exactly the same thing.

Before sacrificing margin, understand why people aren't choosing you. You might need to improve your proposition, demonstrate value more effectively or target customers who appreciate what you offer.

Being cheaper isn't much of a growth strategy if you end up making fuck all profit.

How can I tell whether a prospect genuinely can't afford my product or just isn't ready to buy?

By qualifying prospects properly and understanding their actual needs, budgets and purchasing intentions.

Some prospects are ideal customers who simply aren't ready to buy yet. Others don't have sufficient budget, don't need your product or were never realistic customers in the first place.

A rejection from somebody who doesn't need what you're selling isn't evidence that your prices are wrong.

Speak to your prospects, understand their circumstances and distinguish between immediate opportunities, potential future customers and people who are simply wasting your sales team's time.

You want to sell more, to more people, more often and for more money.

But they need to be the right people.