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Ask HN: How to respond to software cost objections?
I am working with a b2b startup company. The core value proposition of our product is that by putting your data into a database and out of the spreadsheets (the way everyone does it now) you can potentially save a lot of money.
The software system is expensive and one objection people raise is that they could hire a lot of people for the cost of the software to update the spreadsheets more accurately.
Any thoughts on how to respond to this objection?
- akg_67 12y agoAs you most probably know there are several stakeholders in business purchasing decision, which stakeholder you were talking to will be the key to figuring out how to answer this objection? And what is your value proposition. A potential response may be "Then why are you not hiring more people to update spreadsheet." Another response may be "How accurate do you think more people will be with updating a spreadsheet compared to a automated process." Another one could be "How important is accuracy to you?" It all comes down to whom you were talking to, what is your value proposition, what is in it for the business you are selling to, and what is in it for the stakeholder you are talking to.
- wikwocket 12y agoIf your main value proposition is that you can save customers money, then it seems natural that you'll encounter this. Is your expensive database approach cheaper than hiring people to update spreadsheets? If so, then communicate this, perhaps through ROI calculations, case studies, etc. If not, then your value proposition is weak. A better approach may be to not focus on cutting costs but gaining profit. What extra functionality does your database provide, that can make their businesses more profitable? What extra value can you deliver to them? In general, convincing people to give you money so that they can theoretically lose less money is usually harder than selling them on benefits and solving their pain points.
- andrewtbham 12y agoThe ROI thing is an interesting idea. We have done some case studies and trials for potential customers. This is more of a knee jerk reaction to the cost, and a negotiating tactic. It's a tool for purchasing so not sure how it could translate to profit, but interesting idea. The value proposition breaks down differently for different stakeholders. For low level employees that currently email and work on the spreadsheets all the time, it would make their lives a lot easier. Although it does run the risk of eliminating their job. For mid level managers that typically make the decisions based on all this data, it would make their decisions easier and better informed. They are likely to be able to save a lot of money. Perhaps as high as 4 or 5 percent of the budget off a 10-200 million dollar spend. The possible downside is that it will be less at their discretion who to choose for the vendor. Cost is not the only consideration, but it will easily quantify the difference in choosing one vendor over another. Currently I think the vendors schmooze the decision maker and that influences their decision. This tool will make that hard because they don't have control over how the "numbers" are presented to the higher ups. For high level managers, they are interested in the savings. Although this system would make it easier to replace the mid level guy because all the info isn't buried in their email and spreadsheets on their desktop. One other issue is that the ultimate decision maker will come from the high level guys because the cost is so high.
- andrewtbham 12y agoIt's like I'm looking for a succinct way from a sales perspective to undermine that argument. Like... you could just hire a lot of people and get rid of your ERP.