Wouldn’t it be good if every sales call you made ended with the customer agreeing to buy from you at the price that you’ve quoted? For products and services with a relatively low price point, this might happen, but for most businesses it doesn’t. Let’s be honest, if you’re buying something and spending your hard earned cash, and you thought that there was a chance you could get it for less money, you would, wouldn’t you? So when you’re talking to a potential customer, you think you’ve overcome all of their objections, they’ve agreed that your product provides the best solution to their problems and you’ve told them the price, what do you do if they ask you for a lower price, or raise another objection along the lines of “that’s too expensive” or “I can’t afford that”?
First of all, don’t panic! It’s all too easy in these circumstances to cave in and offer a lower price if you think that’s going to close the sale. But if that’s what you do, then a) you may be suggesting to the customer that you don’t believe in the value of your product, or that you over priced it in the first place, (and that potentially damages your reputation and the relationship you’ve carefully built) or b) you might be agreeing to a sale for less money than you could otherwise have earned.
Negotiating is a part of business life, but it’s absolutely critical to your success. Poor negotiation can damage your business just as quickly as losing key customers. If you’re in the type of business where potential buyers expect to negotiate, you need to be ready for it when it happens.
So how do you go about getting what you want, when you want it, at the price that you want?
Firstly, and before you start negotiating, make sure that the buyer actually has the authority to make binding commitments.
Secondly, and you might think this is blindingly obvious, but think carefully about what you want to walk away with.
Understand your strategy
There are basic principles that apply to every negotiation. The first offer that you make is the most important. It’s the benchmark against which all subsequent offers will be compared. You’ll never get what you don’t ask for, so make your first offer a bold one….. but not a ridiculous one.
Always have something that you’re prepared to give away or concede without hurting your negotiating position. Think about some nice-to-have items that aren’t critical to the success of your sale, but might be of value to the buyer. If the buyer decides to take these items out to reduce the overall cost, you haven’t lost anything but it may help the buyer reach their price target.
If the buyer rejects an offer that you’ve made, avoid making a new offer. Once you start down this track, you’re simply giving value away and getting nothing in return. Instead, ask the buyer to propose a counter offer. This will give you an idea of the areas that they may be prepared to move on.
Remember your strengths.
Provided you’ve done a good job up until this point, you should know what’s important to the buyer, you should know where you stand in comparison to any competitive offerings, and you should know the real commercial value that you’re delivering. Restate the value as a justification for the price you’ve offered.
Making an offer
If you think you need to give way on some element, ask for something in return; for example offering a lower price in return for the customer providing a case study. When you do offer a concession use the phrase “If you…. then I…..”. For example you might say “If you can agree to a delivery date of xxx, then I can reduce the price to £x”.
Aim for a “Win-Win”
While you’re negotiating, try to work out what you believe an acceptable outcome would be for the buyer.
Be prepared to give up the little things in exchange for the big things that you don’t want to concede. Ultimately, your objective should be to agree a good deal without making the buyer feel that they’ve been
pushed into a corner.
Closing the Deal
Always have the endgame in mind as you make offers and counter offers. If you’re getting really close to an agreement but neither you or the buyer seem to be able to make that final concession, consider offering to split the difference…. provided, of course, that this doesn’t take you below the absolute least value position that you’d identified during your preparation.
It’s a good idea to keep notes of what you offered, and what you asked for in return. You wouldn’t share these notes with the buyer, but they could be useful in helping you prepare for future negotiations with the same buyer, and they may help you think of ideas to use in negotiations with other customers.