It's a conversation many of us have had with customers. Another company is offering pretty much the same product or service you are--but at half the cost. Or, anyway, substantially less. At this point, there's a lengthy pause in the conversation while your customer waits hopefully for you to make a similar concession. Or the person may ask outright--will you match that other price?

Not if you're smart, you won't. But how do you refuse without losing the customer? Try any of the following:

1. That's really interesting. I wonder how the company makes that work? Let me check into it and get back to you.

Why: You don't know for sure that your competitor really is offering that lower price, only that your customer says it is. The customer may have misremembered, or misunderstood, what your competitor was offering. Or may simply be telling a fib in order to get you to cut your price. You have no way of knowing if any of these is the real explanation until you check it out for yourself.

2. How have our product and service been so far?

Why: When people complain about the price of something, they're often really complaining about something else.

Think about it: If the home you want costs a million dollars, but you can only get a mortgage for $300,000, then yes, price is the stumbling block. But in most situations, price sensitivity masks a more complex calculation that may involve the perceived quality and value of your product, your brand reputation, how much the customer likes you, how well your product fits the person's needs, your history together, and--yes--the competition. It doesn't make sense to focus on only one of these elements.

Asking this question will have one of two results. 1) The customer will tell you about pain points or dissatisfaction with your product, which is information you need. If you can solve the customer's issue or issues, objections to your price may go away.

2) If there are no pain points and everything's been going great, you'll have provided a gentle reminder that your quality and service are dependable--and someone else's might not be.

3. Are you sure the product is exactly the same?

Why: There had better be some significant difference between your product and a competitor's, because competing on price alone is never a smart move. It might work for Walmart, which has its own distribution centers and enough financial clout to force suppliers to do its bidding. But it won't work for a small company, at least not for long.

This is your chance to explain or remind your customer about the features that make your product different. And if there aren't any, or at least any that the customer cares about, then you know it's time to take a good look at your product and see how you can improve it.

4. I'm so sorry, we can't cut our price. If this other product works just as well for you, then you probably should buy it.

Why: If this customer really is going to go with the lowest cost, that's a battle you can't win in the long run. If you lower prices in the short run to accommodate this request, you've set a dangerous precedent, especially if other customers hear about it. And it won't be long before someone undercuts you and you lose the customer anyway.

5. I'm so sorry, we can't cut our price. But what can we do to make our product better?

Why: Holding firm on prices--or perhaps even raising them--can actually work as a competitive advantage, paradoxical as that may seem. First, it saves you from expending time, effort, and goodwill in an ongoing struggle to keep prices (and therefore expenses) to an absolute minimum.

Second, it forces you to be better, to keep looking for ways to improve your product and introduce features and services your cheaper competitors can't match. It may set you on a course of continuous improvement. And, compared with cost cutting, that's a much better place to be.