

Ask HN: How to respond to software cost objections? - andrewtbham

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.<p>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.<p>Any thoughts on how to respond to this objection?
======
akg_67
As 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
If 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
The 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
It'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.

