Dear Tony, since the pandemic, I’m finding the majority of my prospects negotiating on my price and I am getting the feeling unless I concede and reduce my costs, I will stop winning any new business. Any ideas?
You are not alone and companies are tightening their belts, however that doesn’t mean you have to drop your prices every time; in fact I would be suggesting staying strong and be proud of your price. One major reason prospects ask for a discount is because you haven’t demonstrated value. Imagine walking into the glamorous Ritz hotel in London and asking “how much is it to stay the night?” and they reply “£450 per night.” How do you think they would respond if you ask “how much can I have off then?” I am pretty confident they would give you a look of shock and disgust and reply by saying “this is the Ritz Sir, we don’t offer discounts”. Why should you be any different about your products and services?
Now if you push the Ritz further and explain you planned on staying there for a week and insist on a discount, I am sure they would offer you a complimentary afternoon tea or dinner. However, no money has been discounted and they have kept you happy. So to be best prepared for every meeting I would recommend having a few things you can trade in as an alternative for discounting your price. Depending on your product or service, here are a few things you can think about; Payment terms, after sales support, technical help, delivery costs etc. Ultimately you want to give away something that has a big perceived value to your customer and minimal value to yourself, whilst remembering to keeping a good poker face and hiding this fact.
It’s important to remember when entering a negotiation; you’re not looking to win, as that will come across that you are there to do battle. No one likes to lose, so if you win, how receptive would your customer be to move forward? The aim is to for you both to win and both get what they want out of the deal to move forward.