How to Avoid Negotiating on Price

Phil Harrell
Phil Harrell



cash_in_walletMost salespeople think negotiation happens when an engagement is just about to close. The contract is drawn up, and more often than not, the buyer wants the rep to sweeten the deal by extending a discount or freebie. It’s not ideal for the rep, but it’s also not a showstopper. They give a little, the buyer gives a little, terms that are acceptable to both parties are drawn up, and the contract is signed.

But there’s a major problem in this scenario. Negotiation isn’t something a rep engages in only at the end of a sale. If they’re doing their jobs correctly, they should be negotiating throughout the deal -- from the very first call to the very last.

In my view, negotiation is all about leverage. And you don’t wait until the contract is ready to be signed to create leverage. You do it in every action you take and at every stage of the sales process.

Deals are decided on price when a salesperson hasn’t created adequate leverage in their process. To avoid a decision based on price, complete these negotiation exercises along the way.

1) Thoroughly understand your customer’s pain.

You have leverage to the extent that your customer’s problem is acute enough to be causing significant pain. So it’s your duty to probe into their issue during discovery to determine if it’s truly dire, or relatively benign. Questions such as “What are your goals for this year? What are your goals for next?” and “Are you on track to meet those goals?” can help get you to the root of the issue, and discern its severity.

2) Discover the compelling event.

If your buyer indeed has a significant problem, take your discovery one step further and inquire about the reason they’re looking to buy now. Is there some kind of event looming that’s prompting their search? Or is the pain so serious that if they don’t take action now, something devastating will happen? If your prospect has to make a decision by a certain date, your position becomes that much stronger.

Ask your prospect “why now?” questions to uncover a driving event. For example, “What happens if you don’t have this product or service in place by X date?” or “What’s driving your company to look at our solution now?”

3) Implement a give-get system.

Buying involves a buyer and a seller, and therefore it’s a two-way street. While a seller should strive to serve their buyer, they should also get something in return for their efforts. To improve their leverage, smart sales reps will set the expectation of give-get with their prospects early.

This means that every time a seller provides something to a buyer, the buyer should reciprocate with an item of equal value. For instance, if a buyer wants a demo, a salesperson could request that they fill out a product questionnaire beforehand. Not only does this provide the seller with valuable information, it also tests the buyer’s investment in the deal. If the prospect isn’t willing to give when they get, the salesperson might want to reevaluate if this opportunity is worth pursuing.

Another example: a buyer would like to speak to a reference customer, and a salesperson asks for a high-ranking stakeholder’s contact information in return. These mini give-get negotiations help the buyer get what they want, and simultaneously improve the seller’s leverage.

4) Present a business case.

Especially in corporate sales, buyers want hard proof of ROI before they commit to anything. So give it to them. Take the time to put together a business case, and show in real numbers how long it will take to earn back the money spent on your product or service, and how much more revenue they can expect as a result of it. Note that this requires business acumen, so dedicate yourself to learning as much as you can about the buyer’s company and industry.

Case studies are also helpful in this pursuit. Show how your offering impacted a business similar to your buyers’ in terms they care about. This proof goes a long way in creating leverage.

Negotiate for a Fair Deal

The tips above can help a salesperson strengthen their position with a prospect. But note that a strong hand isn’t the same as the upper hand. There shouldn’t be a winner and a loser in a sales negotiation; if done correctly, both parties should win.

Think about it this way. If a salesperson has a good amount of leverage based on the prospect’s acute pain, a compelling event forcing action, and a convincing business case, then this means they’re in a great position to solve the buyer’s problem. And solving the problem obviously benefits the buyer. Put another way, when a buyer’s need is high, a salesperson’s leverage will be high -- and both will benefit from the deal. Everybody wins.

Don’t treat negotiation as a way to fool someone into buying your product. After all, it’s not a zero sum game. Negotiate for a fair deal -- every time.


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