Your dream client is going to ask you about your price. More specifically, they are going to ask you if you can lower your price, even though they may use words like, “Can you do something for me?” or “You need to sharpen your pencil!” Your future client is responsible to their company by ensuring they get the best deal possible, and you are accountable to your client for ensuring they make an investment large enough to ensure they receive the new and better results they need. Here are four proven strategies for success in negotiations with a couple of prerequisites that increase your effectiveness.
Push Back and Defend the Investment
If you want to telegraph that you are going to discount the price you provided your prospective client, you need only say these words: “Let me talk to my manager, and I will see what we can do.” With that statement, you have already conceded the price is negotiable, and your prospect expects a different number because your response suggests it is possible. Not a good starting point for a negotiation, in large part, because you are not negotiating; you are offering a price concession.
Not defending the investment is how you fail your client. When you allow them to underinvest, you take money out of their solution, and in doing so, deprive your company of the ability to invest in delivering for your client. You are responsible for defending the investment you are asking your client to make because it is necessary to produce the better results you promise them.
Verify the Importance of the Outcomes
There is a reason your dream client is changing. People don’t change unless they want or need better outcomes. If your prospective client is changing, it is almost certain it is to obtain a result that is an improvement over their current results.
You can verify the outcome is still necessary enough to pursue and that it still makes sense to invest in that outcome. To do this, you need to go back over their results to make sure they are still crucial to your future client. If the outcomes haven’t changed, then the price is still valid. If the investment is incorrect because the results changed, you need to offer to look at a new solution, but this is rarely the case. Your client is just being responsible and asking for your best price.
Tie the importance of the outcome to the investment. No one has ever improved a solution by removing money. Many solutions, however, have been greatly improved by money being added to them.
Justify the Delta and Explain the Risk
You must be able to explain the investment you are asking your client to make. There may be a difference between the investment you are asking your client to make and what they have been paying your competitor. It is also possible you may have to help them make sense of your price when looking at your numbers right next to your competition.
If you can’t explain to your prospective client why your price is higher and how that premium is being invested on their behalf, you are leaving them exposed to the questions from their team on why they are paying more. You are also creating doubt around the necessity of paying your price.
What happens when your prospective clients underinvest? What concessions do your competitors routinely make that causes them to fail and, by doing so, make it easy for you to displace them? Instead of discounting your price, you are better off explaining the risk to the client of underinvesting in the outcomes they need.
Trade for Something of Equal or Greater Value
First of all, let’s accept that most of the time in sales, we are not engaged in high stakes negotiations. You are not working on negotiating a peace treaty between two belligerents in some faraway part of the world. You are trying to protect the investment you need your client to make so you can get them the better results others have failed to provide, some part of those failures coming from a lack of investment.
If you are honest (and I know you are, or you wouldn’t be reading this), it is rare that you ever negotiate. Instead, you concede. You give your client a price reduction to win their business, even though it isn’t necessary, and even though it doesn’t in any way help them achieve a better result.
There is one thing you must do if you want to turn a concession into a negotiation, you must ask for something equal to or greater than the value of what you give. If you don’t ask, you are not negotiating. You should know what you want before your prospect ever asks you for a discount or price concession. Their lower price and your ask need to be linked for there to be a negotiation.
There are a few things you can do to make negotiating or defending your price easier. You can think of these as perquisites.
Introduce Your Higher Price Early
If you know your price is going to be higher than your prospective client is used to paying, you are better off leading with it as early in the process as possible. I wrote about this in The Lost Art of Closing: Winning the 10 Commitments That Drive Sales. I have never found it useful to wait until I turned in a proposal to educate the client about the investment they are going to need to make. You are better off establishing that the outcomes your dream client needs are worth the investment early.No more pushy sales tactics. The Lost Art of Closing shows you how to proactively lead your customer and close your sales.
Discover the Implications
If there are no implications for paying a lower price, there is no reason they should pay more. If you don’t discover and discuss the consequences, you aren’t helping your prospective client address the risks of investing too little.
The reason you find so many clients unhappy with their results is too many of our brothers and sisters in sales have allowed them to underinvest.