Negotiating Price

"I love the solution you guys came up with, it's just too expensive."  There's probably 20 different ways you're going to get a price objection when you're in almost any phase of the sales cycle.  If you could digest all of the situations you've been in, in regards to negotiating price, there's some key take-aways to remember.  Hope this blog helps to navigate this dicey area, WITHOUT LOWERING YOUR PRICE.

• Uncovering budget (or the way in which the customer will evaluate price) is not the same thing as negotiating a price objection.  Budget discussions should happen EARLY in the sales cycle.  Discussing how the customer will look at value is like uncovering any other piece of information that is critical in the early phase of qualifying the opportunity.  You should be talking about how they make and spend money, whether they typically pay more to get a better solution and setting expectations as to what things really cost.  A good salesperson never experiences "sticker-shock."
• Make sure you get granular as to what a price objection really means.  Many times, customers throw out a pricing problem because there are underlying product or service objections.  Maybe they don't really understand the VALUE that your solutions can bring to their organization (maybe not).  Your job is to flush this all out.  If there are hidden objections beyond price, take those on first.  No reason to discuss price if the solution isn't really valued by the customer.
• If you're confident that your solution is REALLY what they want to buy, then lowering your price should be off the table right away.  To test your confidence, ask this question, "If we can't lower the price, does that mean you're not going to buy it?"  I'm simplifying this for the purpose of this blog, but you get my meaning.  If the answer isn't a straight-out "no," it's all over.  If the answer is really "no," don't you want to know this?
• If you have to negotiate price, ask the customer FIRST what the breaking point is.  Don't offer up any discounts without knowing what they'll consider.  You may give away profit just because you spoke first.  Any good negotiating class will teach you to listen and stop talking.  The party that speaks first will likely give away more than the other.
• There are only 3 things you can do with a real price objection if you take lowering the price off the table:  1) Reconfigure the solution;  2) Show more value;  3) A combination of the two.  If you set these expectations with the customer after flushing out the objection, it's much more likely that they'll work with you to pick one of the three.  Remember, you need to do your job BEFORE you get to this point and assure that what you're selling is what they really want to buy.  If you haven't, you have bigger problems than a discount.

Lowering your price is a lose-lose for all parties.  The customer loses because it forces them into a frame-of-mind in which they have to battle to get what they want.  Nobody likes to do that.  Your industry loses because lowering pricing erodes the profit margin for everyone up and down the manufacturing/service chain.  You and your company lose because you did two things:  1) You reinforced the concept that your company doesn't already come to the table with a fair price;  2) You make less profit.

See you next time.