Price Negotiations Making You Nervous? Do These 3 Things.


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Sometimes the best way to avoid a price negotiation arm wrestling contest is to avoid it all together.

Sometimes the best way to avoid a price negotiation arm wrestling contest is to avoid it all together.

A few years back, we had a medium-sized customer who seemed ready to expand their business with us and start spending some serious money. It was a big enough opportunity for me to fly to London and take the train up to Nottingham, England, a place famous for the Sherwood Forrest of Robin Hood fame.

Anyhow, we had a nice lunch with our customer and then they wheeled in the purchasing team to strike a deal. I knew they were coming, but hadn’t focused on them too much to this point.

They started the negotiation by indicating that they were expecting at least a 50% discount on our current prices. I patiently explained to them that as much as we wanted to expand our business, our margins were nowhere near 50%, so we were in no position to offer them that type of discount.

The purchasing lead explained patiently to me that without a 50% discount, our meeting was over. (People are so polite in England!)

I closed up my notepad, put it in my briefcase and left. My sales team was shocked and was besides themselves on the train ride back to London. Three weeks later, we had the deal at a great price for my company.

Even though it worked out, we hadn’t done our pre-work when it came to the pricing discussion, and it put our deal in serious jeopardy. Don’t let that happen to you. The best pricing negotiation, is one that doesn’t happen.

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Here’s how you can increase the odds that price does not become a sticking point:

Discuss Price from the Beginning

In my view, the price negotiation should start early in the sales process. Whatever your company’s position, you should bring it up from the get-go. For me, I always enjoyed telling prospects in early meetings that we were likely to be their highest cost – but highest value – option. This way when they received the proposal, they would already be used to the idea.

While in my first sales job with a middleware software company – we would explain that we had a tiered discounting structure and would present it to our customers as we were qualifying them. This way there is no elephant in the room. Everyone is on the same page seeing both the value of the product and what it will cost them.

Ask For Budget Guidance Early

Next, I’m a big fan of asking a prospect what their budget is very early in the sales process. Odds are they aren’t going to tell you, but their reaction to the question is important. Plus, it also makes them think about it.

Assuming they didn’t tell you their budget, I recommend later giving them a range based on your experience of what they might be buying. Be sure to set the top end of the range a bit high, but also the bottom end low enough to make them feel like they have options.

Worried about scaring them off? Well… it’s probably for the best if they get scared off before you give them a proposal or waste a lot of time.

Once you have the range discussion, you can use it later to get more granular with them about price before delivering the proposal or quote. This way when you do deliver it, they can’t pretend to be shocked. Save yourself time and energy on those who won’t be able to afford your product anyway.

Be Confident in Your Value

As we discussed recently, even legendary salespeople need to be part of a great team to be legendary. Part of that is selling a product you really believe in and one that has value. If you’re not doing that, it’s time to find a new job ASAP.

So… now that you truly believe in your product, go ahead and wear it on your sleeve. Be insulted when people want a discount. Treat it like it’s your baby. Building the value of your product relies heavily on you and your presentation. If you bend over and reduce the price, the customer is going to see less value in your product immediately, which can cause you other problems down the road.

All in all, when it comes to price negotiations, boldness and straight talk are the way to go. Talk about your value AND cost early and honestly. By doing so, you can weed out any unrealistic buyers early and show serious clients you have a product with value. I know damn well I will never travel around the world to meet a client ever again without the proper pre-work on price done. You shouldn’t either, so keep these tips in mind to minimize your price negotiations.

Photo courtesy of Flickr user leahbee5.

Republished with author's permission from original post.

Adam Honig
Adam is the Co-Founder and CEO of Spiro Technologies. He is a recognized thought-leader in sales process and effectiveness, and has previously co-founded three successful technology companies: Innoveer Solutions, C-Bridge, and Open Environment. He is best known for speaking at various conferences including Dreamforce, for pioneering the 'No Jerks' hiring model, and for flying his drone while traveling the world.


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