Despite your best attempts to sell value and remain firm on your price, some clients will
press ahead with their request for a discount. After a solid attempt from you to reassure
them that your price is fair, if your prospect is still pushing for a discount, you have
a choice. Walk away from the business because you want to maintain your price or slowly start
to give concessions in an attempt to win (or save) the business.
If you want to give concessions, following a simple system will ensure a profitable negotiation.
Your First Step
The first step, always, is to find something else to give up that doesn’t reduce your price.
Free shipping. Extra manuals or training. A client profile on your Web site. What you choose
will be specific to your business, your markets and your client base. The key is to have
the list of things you’re willing to offer prepared in advance, so you can draw on it during
the negotiation.
It’s hard to think creatively in the heat of a negotiation, so planning ahead can give you
a ready-made solution that leaves both you and the client feeling satisfied with the transaction.
Your goal is to maintain the price integrity of your product while delivering extra value
to the customer with a service that does not cost you anything (or very little). For example,
if the customer asks you for a discount consider offering them following instead:
- An unconditional money back guarantee
- Free shipping
- Payment terms
- Payment with credit card
- Free training CD’s or in house training by you on the product
- Access to a public seminar or trade show your company is sponsoring
- Free set up (if you are a printer/embroidery/promotional products company)
- Future discounts based on volume: the company will pay full price today and receive a
discount on a future order. You can also do this as a gift certificate for them to use
later. - Free electronic copies or hard copies of your help / training manuals
- Upgraded support levels
- Participation on your client advisory board or panel
About half the time, your customer will take you up
on the offer to provide a "non monetary concession." The other half will continue
pressing for a price discount because in today’s marketplace it has become all too
common for one supplier to attempt to trump all others by lowering their price. In many cases,
your clients are being trained by the competition and other vendors to demand lower pricing
from you. It’s a short term strategy, and it does little to benefit buyers but
that doesn’t make it any easier to assure prospects they’ll get equal or better
ROI by paying more. Sometimes, a prospect just wants you to lower your price, and you (with
your company’s support) will need to consider doing it.
Your Second Step
If you feel you have to give up a discount in order to close the sale, do yourself a huge
favor and always ask them one of the two following questions first:
"What is important to you about an x% discount?" or
"Why is an x% discount important to you?"
These questions will flush out any last details that could help you find a different way
to structure the terms and pricing. This allows you to keep your price while letting the
customer walk away with their needs met as well. If, however, you ultimately do have to reduce
your price, make sure to follow these two rules:
- Never reduce your price without getting something in return. Getting something in exchange
for a pricing concession is key to managing customer expectations that future discounts
will not be easily dished out. As with the "no money" concessions above, what
you get in return for a price reduction will be unique to your business and markets. It
could include references or case studies, a bigger order, introductions to senior level
executives or cash up front, etc… Again, whatever you ask for, prepare the list
in advance so you can respond quickly and smoothly.
- Nothing is worse than coming to an agreement on price (especially a reduced price!) only
to find out that your prospect is still looking for other concessions. Be sure to get a
firm verbal agreement from the customer that this discount is all they will need to get
the deal done. Try asking them something like "I’m not sure if I can get you this
price, but if I can, is it fair to say that we can go ahead?" or "I’m not sure
I can get this discount for you. If I can, though, are you willing to ….?"
By asking them this last question, you can ensure you
get all the issues on the table first, giving you the chance to deal with them fairly once
and for all. So what goes after the "willing to"…. in that question? I
believe that if you must, absolutely must reduce your price to win the business NEVER let
that price drop without getting something in return. "No Free Gifts" my friend
Steve Kraner taught me. Try some of these best practice ideas submitted from Engage clients
for finishing the question…
"I’m not sure I can get this discount for you. If I can, though, are you willing to ….?
- place your order today?
- provide full payment up front?
- place a larger order?
- provide me 3 qualified referrals / introductions?
- give us a testimonial or case study?
- all us to sponsor the event you are organizing?
- invite me to the event you are having for their clients?
- provide me space in your newsletter for a monthly column?
- provide my company an exclusive purchasing arrangement?
- introduce me to additional departments or internal decision makers?
- have us in for a "lunch and learn session" with your staff?
This step is easy to do if you have conviction. The
first step to finding better clients – ones that focus on value and not price – is
making sure you are 100% confident that you are delivering such a high value to the marketplace.
Confident that all buyers will want to own it at full cost. When you do believe this, you
will not have any trouble asking for something valuable in return for your price discount.
Remember that what you ask for does not have too
be of equal monetary value. In fact it can be free for the customer to provide as long as
it has value for you. The goal is to employ reciprocity – you will gladly scratch the
customers back as long as they are willing to scratch yours! Creating equality in your client
relationships ensures that you will have a long lasting trust based relationship which reduces
the amount of "shopping" the customer does each time they need to order. This
increases your profits, decreases your sales cycle and encourages referrals.