Over the last 9 plus years, hundreds of founders have come to me for coaching on their sales and go-to-market challenges. And I’ve done my best to help. In the next few months, in the form of weekly episodes, we’ll be looking at the top startup sales misconceptions folks possess. And how I get them to think instead. Reading this series will make you smarter and more aware than most startup operators, as you’ll already know how to think about go-to-market and sales, and avoid some of the biggest pitfalls. Consider this your cheat sheet in shaving months off your revenue growth journey. Here’s your third installment. Read on.

“I should give pricing when it’s asked of me by the prospect.”

“Send me a quote, if you could. I’d love to review it with my team and then get back to you.” Prospects will ask.

And most junior reps or inexperienced startup operators will acquiesce. Although it’s a huge mistake.

“But, Paul, don’t we want to be customer-centric? Isn’t it a good idea to give prospects what they want?”

“Of course, I want you to treat your customers with the greatest care. But not when you’re doing yourself and them a disservice in the process.”

Let me explain.

When you send a quote to a prospect without having a chance to present it first, you prevent yourself from defending your offering’s value, answer questions that might come up and even surface and handle objections. All things that are essential to closing deals.

Instead, when prospects receive a proposal, they’ll often flip to the last page, to get to the commercials. And if your pricing doesn’t fall within their budget, they’ll let you know they’re passing via email. Or they might ghost you outright. In either case, you don’t get an opportunity to garner feedback as to why they passed. At the very least. And at most, you don’t get a shot to do all the things that can lead to closing a customer. Including pulling a discount out of your backpocket, if need be.

“But, Paul, this feels manipulative. I hate when folks don’t get me pricing upfront. Do I really need to wait until we get to a proposal review call?”

And I see where you’re coming from. Does it feel more transparent to give everyone pricing at the very beginning?

Of course. But there’s a strong reason why seasoned salespeople don’t give pricing till much later on.

The longer you spend with a prospect, the more value you’ll convey. And the more trust you’ll build. Both ingredients to securing a paid customer.

If you give pricing at the very top of the sales process, there’s a great chance your prospect isn’t fully aware of the value of your product or service. And thus, comparing it to your (high) price will have them back away with sticker shock.

On the other hand, if you’re able to give yourself the time to properly build up trust and the value of your product in your prospect’s mind before presenting pricing, you’re far more likely to convert as a customer. The value is so clear to them by then. It now feels like they’ll derive value in the multiples of what you’re about to charge them. And you’ve positioned yourself as their trusted advisor. Signing on the dotted line becomes the obvious choice.

Think back to the last time you purchased a complex product. Perhaps you’d been pulling your hair out about your accounting department’s current processes. Specifically, you hate that it takes you hours upon hours to get an accurate picture of your account receivables. You’d love to be able to feel good about collections on invoices that have been sent out in the past ninety days. You end up reaching out to EasyAccounting, a mature startup you’d heard of from a buddy of yours that also runs an accounting team. Over post-pickleball beers, you remember him saying, “Dude, call them…best thing I’ve done.. Has made my life ten times easier. I get these gorgeous reports every Monday morning. I forward them to my CFO. And voilà…he’s off my back now…I couldn’t be happier.”

After filling out the inbound lead form, you’re booked for an intro call with a sales rep named Tony.

“Hey Tony, great to meet you…got a great recommendation from my friend Greg. Can you tell me a bit about you guys…?”

Tony gives you a snappy overview of what his software can do, including the company’s long-term vision. He qualifies you with a few questions and gets you talking about your pain in figuring out how to get a grasp on your account receivables. “Tony…I need to have an accurate, up-to-date picture of our ARs. But right now, it’s cobbled together. With what-feels-like duct tape.”

“Well, we typically charge $12K per year for our software. What do you say? Ready to move forward…?”

Not only would this feel abrupt and misplaced. But you’d have a hard time parting with that cash without also getting a sense for the savings you’d get from signing on. Do you fully appreciate the product’s value at this point?

Likely not. You were just starting to get exposed to it.

Now let’s envision this alternate scenario. Tony is able to not only wow you with a custom demo, but also take you through a rigorous ROI calculation. “With our software, customers typically save 10 man hours per accountant each month reporting on their account receivables. At $50/hour, with a team of your size, that’s $8,000 a month. At our standard pricing of $12K per year, you’d only be spending the equivalent of $1K/month to unlock that saving.”

The fog has parted. And it’s now crystal clear what you’re getting for your money. An 8X return on investment. You’re eager to transact. “I’ll tell you what Tony, let’s get this done…when can you onboard us?”

Let’s consider the difference between these two situations. In one, you’re given pricing without fully understanding what you’re getting in return. In the other, the value has been served up to you on a silver platter, before the price was unveiled. If you don’t understand what you’re being offered early on, I’m likely to be scared off by a high price tag.

Yes, it might feel calculating to not provide pricing early on. But here’s a helpful reframe. If you truly believe that your prospect is better off with your product in their hands. And that they’ll be deriving value in the multiples of what you’ll be charging them. Then, holding out on the price till later is just giving them a greater chance to benefit from your product and its stellar ROI.

Next week, we’ll look into why forcing functions are critical to a successful sales process.