How to Handle Pricing Pressure
As a salesperson, sooner or later you’re going to find yourself being pressured to reduce your price. How can you win the sale but give as little money away as possible?
In any purchasing negotiation, pricing is sure to be an issue, and the larger the contract price the bigger the incentive to haggle, and the greater the expectation that the price is negotiable.
If you are selling commodity CRM systems for a few dollars or pounds a user, then most customers will understand that there isn’t room for negotiation. If you are selling a nuclear power plant that doesn’t have a fixed price, the negotiations could go on for years.
So how do you handle price negotiations for a product or service that falls somewhere in middle of those two? Here are some rules:
Price Negotiation Rules
The first thing to do is to find out how serious the prospect is about not purchasing at list price. If they don’t have a viable alternative then their scope for negotiating is limited, if they have any at all. They could of course delay purchasing.
If they are quoting competitor pricing to you, ask them who and what exactly is that price for, it may not be a compatible alternative. Some people just love to negotiate for the sake of it, love to do a deal when in reality they are happy with the list price. They just want the fun and kudos of getting another 10% off.
The next thing to do is to know what your back stop is. This may be decreed by your company, but you need to know at what price you should walk away. If you don’t know that, then you can’t negotiate.
If you want the business and have to give a discount then:
Of course, the ultimate trick is to – increase the price! Instead of giving them a 15% discount off what they want, offer them a more expensive option with a great discount, that comes to more than the original quotation. That way the customer gets a great discount and walks away happy, and you increase rather than decrease your sales revenue.