When a prospect says "it's too expensive", the useful move is to go back to the value you agreed on, not to lower the price. The steps below come from three Y Combinator pricing and sales talks: Tom Blomfield's How To Price For B2B, Kevin Hale's Startup Pricing 101 and Gustaf Alströmer's How to get your first customers. Their examples are mostly B2B software, so adapt the amounts to your market.
Step 1: Go back to the value equation
Blomfield's core idea is the "value equation": sit down with your champion (the person inside the customer who likes your product), write down what your product will deliver in saved cost, saved time or extra revenue, and let them challenge the assumptions, because it is the document they will take to their boss. He suggests pricing at roughly a third of the value, so the customer keeps about two thirds. If the objection comes, return to those numbers instead of defending your price in the abstract. The B2B ROI calculator helps you put figures on it.
Step 2: Ask what the result is worth
Blomfield says founders are often afraid of the willingness-to-pay conversation, and that fear is "almost always not true". He recommends asking: "If I can solve this problem for you and deliver these metrics we've talked about, how much would that be worth to you?" The answer tells you whether the price is wrong or the value is not yet clear. A copilot that flags objections during the call can help you notice the moment it appears.
Step 3: Do not start a price war
If a competitor is cheaper, Blomfield warns that undercutting leads to a race to the bottom, and recommends differentiating on functionality, a niche or an integration instead. Hale adds that early adopters care more about benefits than price, and that a startup that charges half of the competition "almost never" wins by doing so.
Step 4: Reduce the risk, not the price
When the doubt is about whether it will work, offer a short, paid pilot with clear success criteria, or an annual contract with a 30 or 60 day money-back guarantee. Blomfield and Alströmer both prefer this to long free pilots: Alströmer says that in B2B a money-back guarantee works better than a free period, because if you do not charge, "they are not a customer".
Step 5: Know when to walk away
Alströmer says that if a prospect does not want to pay, that is a sign to move on to the next one. Blomfield offers two checks: if every deal closes straight away you are almost certainly underpricing, and if you lose more than 25% of deals on price alone you are probably in the right range. Hale's version is to raise the price in steps of 5% until you lose about 20% of deals. Afterwards, the post-call report records which objection came up, and the objection preparation tool helps you prepare the next answer. See also how to reach your first $10k of monthly revenue.
Sources: Tom Blomfield, How To Price For B2B (Y Combinator, video); Kevin Hale, Startup Pricing 101 (video); Gustaf Alströmer, How to get your first customers (video).
Should I give a discount when the prospect says it is too expensive?
The YC talks point to other levers first: show the value equation, ask what the result is worth and lower the risk with a short paid pilot or a money-back guarantee. None of them recommends discounting as the first move.
How do I know whether my price is too high?
Use the checks from the talks: if you lose more than about 25% of deals on price alone you are probably in the right range, and if every deal closes immediately you are probably too low.