How to Handle "Your Competitor is Cheaper" in Software as a Service Sales

Every SaaS sales rep knows that sinking feeling when a promising prospect drops the pricing bomb: "Your competitor is cheaper." In a world of endless software options, price comparison has become the lazy prospect's go-to objection.

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Why SaaS Prospects Say "Your Competitor is Cheaper"

Price comparison is the simplest defense mechanism prospects use to avoid making a real decision. They're not actually comparing value—they're looking for an easy escape route from a potentially complex buying process.

The Real Reasons Behind This Objection:

• Fear of making the wrong investment

• Lack of understanding of true product value

• Procurement pressure to minimize costs

• Desire to feel like a "smart" buyer

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The Wrong Way to Respond (That Most Reps Do)

Most sales reps panic and immediately start defending their pricing or—worse—offer discounts. This approach screams desperation and actually undermines your product's perceived value.

Don't:

• ❌ Immediately discount your price

• ❌ Bash the competitor directly

• ❌ Get defensive or argumentative

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The 3-Step Framework That Actually Works

Step 1: Acknowledge Without Agreeing

Validate their research while subtly challenging their comparison. Show you understand their perspective without conceding ground.

Example Response:

"I appreciate that you're doing your homework and comparing solutions. It sounds like price is a key factor for you right now."

Step 2: Reframe the Conversation

Shift from price to value. In SaaS, the difference between a $500 and $1000 solution can mean millions in potential business impact.

Example Response:

"Let me ask you this: What specific outcomes are you trying to achieve? Because the cheapest solution isn't always the one that delivers the results you need."

Step 3: Ask a Diagnostic Question

Questions are your secret weapon. They force the prospect to think beyond surface-level price comparisons.

Power Questions to Ask:

• "What specific features matter most to your team?"

• "How are you measuring the ROI of this investment?"

• "What happens if you choose the wrong solution?"

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Real-World Example: CloudFlow Analytics

When CloudFlow Analytics was selling their enterprise project management tool, they encountered a prospect comparing them to a competitor priced 30% lower.

What Happened: The sales rep didn't argue price. Instead, they walked the prospect through a detailed ROI calculation showing how their solution would save the company $250,000 annually in productivity gains.

Key Takeaway: Price is relative when you can demonstrate clear, quantifiable value.

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Industry-Specific Considerations for Software as a Service

SaaS sales have unique dynamics that make price comparison more complex than other industries. Technical evaluations, security requirements, and integration challenges mean "cheaper" rarely means "better."

• Long-Term Contracts: Price isn't just about monthly cost, but total contract value

• Average Deal Size ($25,000): Marginal price differences become insignificant

• Typical Objection Triggers: Complex buying committees, multiple stakeholders

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5 Variations You Can Use Tomorrow

Variation 1: The Empathy Reframe "I get it. Price matters. But have you considered how much this could cost you if you choose the wrong solution?"

Variation 2: The Social Proof Angle "Companies like [Competitor's Known Client] initially chose the cheaper option and ended up migrating to us after six months."

Variation 3: The Risk Reversal "We're so confident in our solution, we offer a 90-day full performance guarantee. Can your cheaper alternative do that?"

Variation 4: The Future-Pace "A year from now, would you rather have saved $100 a month or generated an additional $50,000 in revenue?"

Variation 5: The Direct Challenge "If price is your only criteria, I'm happy to recommend you go with the cheaper option. But let's first confirm you understand what you're actually buying."

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Common Follow-Up Objections (And How to Handle Them)

"But the features look the same" → Use a feature-by-feature comparison that highlights your unique capabilities and implementation support.

"We're on a tight budget" → Discuss flexible payment terms and potential ROI that offset the investment.

"Our team wants the cheapest option" → Involve more stakeholders and demonstrate total cost of ownership, not just sticker price.

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The Bottom Line

Price objections are rarely about money. They're about perceived value, risk, and understanding. Your job isn't to be the cheapest—it's to be the most valuable.

Quick Win: Start recording your objection handling calls and analyze your language. Identify patterns that work and those that don't.

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Posted by ScriptFly AI Team