Archive for the ‘price’ Category

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Sales Negotiators Know How To Ask “How Much?”

Friday, November 12th, 2010
Image Credit If you don't know how much it's going to cost, then your in big trouble

If you don't know how much it's going to cost, then your in big trouble

Sometimes it’s the littlest of things that can trip up even a professional sales negotiator. In this case, we often don’t want to ask the one question that we need to ask the other side of the table: “how much does that cost”. In the end, this can end up costing us a great deal…

Why Don’t We Ask “How Much”?

This seems like such a trivial issue, and yet it all too often turns out to be a big deal in the end. The question that we need to find an answer to is just exactly why we don’t seem to be able to remember to ask the other side how much something is going to end up costing us.

There are a lot of different reasons why we don’t feel comfortable doing this, but getting to the reason that is holding each of us back is something that is important for each of us to do. One big reason is often that we fear that simply by asking the other side how much something costs, we’re going to cause them to raise their price to us.

Other reasons can include not wanting to get involved in a long, drawn-out negotiating session (go figure that!) that could result if the other side’s price is to high. Another reason could be that we fear what asking for a price will communicate to the other side of the table about what we think of them. Like perhaps we really don’t trust them and we’re checking up on what they’ll be charging us.

Why Not Asking Is The Wrong Thing To Do

The primary reason that not taking the time to ask the other side how much something is going to cost is a bad idea is because it can quite easily end up costing you a great deal of money. This is a case where what you don’t know can come back and haunt you.

When you are negotiating with the other side of the table and you don’t ask them how much something is going to cost you, then you are making an assumption about how much it’s going to cost. This assumption is not necessarily correct.

The farther that you go into the negotiations without clarifying this issue, the stronger your self-generated belief in what the price is going to be will become. After awhile, you won’t even think to ask the other side how much because you’ll assume that the number that you are picturing in your head is the same number that they have in their head.

It’s disconnects like this that can easily trip up a sales negotiation in the 11th hour. Assumptions that have been made about price turn out to be not true and that can screw everything up at the last minute.

What All Of This Means For You

One of the most important questions that you can ask during a sales negotiation is “how much”. Although this sounds easy to do, it turns out that for most of us it’s actually quite difficult to do.

The reasons that it’s so difficult to do vary from negotiator to negotiator. However, it generally has to do with either not wanting to upset the negotiations or from a false sense that both sides have the same price in their heads.

When you are involved in a sales negotiation, take the time to ask “how much” every time the other side makes a proposal to you. It may feel a bit awkward the first few times that you say it; however, over time you’ll get comfortable using this power phrase and you’ll be amazed at just how much information you’ll get by using it!

- Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World Negotiating Skills™

Question For You: Can you think of a case in which asking “how much” would not be appropriate?

Click here to get automatic updates when The Accidental Negotiator Blog is updated.

What We’ll Be Talking About Next Time

How would you like to end up spending the next year in court and costing your company many millions of dollars? Not a good way to manage your IT Leader career, eh? Too many of us risk doing this whenever we try to fill an IT position without first clearly defining what the job is…

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Stand Your Ground: Two Ways To Not Fold During A Sales Negotiation

Friday, April 30th, 2010
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In Order To Defend Your Side Of A Negotiation, Always Have An Exit

In Order To Defend Your Side Of A Negotiation, Always Have An Exit

So there you are: the classic sales negotiator in the headlights. You’ve got a firm fixed price that you’ve been told to not budge on and yet you know that you’re getting ready to start a negotiation during which the other side is going to be hammering you to lower your price. Sure doesn’t make you want to get up early in the morning, does it?

Rule #1: Slow Down

When I’m working with clients who have a technical background, the question of how fast to move during a negotiation often comes up. Specifically, if you think that the price that you are asking for is going to be a big bone of contention, then should you just cut to the chase and start talking about price right off the bat?

Interestingly enough, and somewhat counter intuitively, the answer is no. If you jump to talking about the issue that you think is the most important, then you’ve lost an important opportunity to find out what the other side of the table thinks is the most important issue – and it may not be the same thing that you are worried about.

Taking your time also gives you a chance to gauge the other side of the table’s interest in the overall negotiation. If they need to get this deal done and move on to other things, then there may really be no sticking points at all if you don’t bring them up.

Finally, by taking time to get around to a major issue in the negotiations you are sending a signal to the other side of the table. Specifically, you are telling them that you are not all that anxious about this negotiation and that you won’t be caving in to their demands.

Rule #2: It’s All About Your Exit Plan

If you are going to look the other side of the table in the eye and tell them that your price is the best price that they are going to get from you, then you’d better be ready to back that statement up. This means that you’re going to have to have done your homework if you want to have an exit plan that will allow you to avoid having the negotiations end in a wreck.

Why are you charging the price that you are charging? Is your price as good as anyone else’s? Prove it. Is it based on what you charged this customer last time they bought from you? Prove it.

Your goal here is to boost the credibility of your price in the eyes of the other side of the negotiating table. The more that you’re able to do this, the better the odds are that you’ll eventually be able to get them to agree to doing a deal with you.

There is one additional side benefit to doing your homework and providing a solid backing for the price that you are asking. If in the end you find yourself having to make some sort of concession, no matter how small, on your price, then having presented a solid case for the price will end the discussion. The evidence that you provided should stop the other side from asking for even more concessions.

What All Of This Means For You

Starting a negotiation when you know that you you’ve got to defend a price that will be coming under heavy assault from the other side of the table is never fun. However, it is possible to be successful if you’ve done your homework before the negotiations begin.

Speed kills in a negotiation. Don’t dive in and start talking about the most challenging part of the negotiation right off the bat. Instead let the other side drive the discussion and find out what’s important to them. Also always have the facts to back up your price – it will make your job that much easier.

It is possible to come out of a negotiation with your price intact. All it takes is the good sense to take it slow and to come prepared to explain why your price is one that the other side is going to be willing to live with.

- Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World Negotiating Help For Technical Staff

Question For You: Do you think that you should ever bring up a negation point, or should you always leave this to the other side to do?

Click here to get automatic updates when The Accidental Negotiator Blog is updated.

What We’ll Be Talking About Next Time

Ok, so it’s time to get down and dirty about this sales negotiating stuff. Time after time I keep seeing sales negotiators making the same two mistakes over and over again and it just has got to stop. You can build the best product in the world, have the best sales team, but if you keep dropping the ball when it comes to negotiating the sale, then it’s all for naught…

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The Total Cost Approach For Dealing With Unmovable Prices

Friday, April 23rd, 2010
Image CreditSome Sellers Say That Their Prices Can’t Be Moved, But Are They Right?

Some Sellers Say That Their Prices Can’t Be Moved, But Are They Right?

When a seller is standing firm and appears to have no desire to make any concessions to you on the price of the product or service that they are selling, what’s a buyer to do? I don’t care how charismatic you are, you can spend all day talking and still not make any progress on getting a better price. In this case, the best thing to do is to stop and take a different angle: try the total cost approach.

The Total Cost Approach

Deep down we all know that the purchase price of an item is not really the true price that we’re going to end up paying for it. There are lots of additional costs, fees, and services that go along with it. Ultimately it’s the total cost of what we’re going to end up paying that really counts, not just the initial purchase price.

As a buyer, once you realize that the seller is unable or unwilling to move on the price of what they are selling, the burden of finding a way to make a deal falls back on your shoulders. You’ve got your work cut out for you.

Case Study: Buying That BMW

Ahh, a BMW – if you believe the advertising, then it’s truly the ultimate driving machine. If you’d like to purchase one and everyone else is thinking the same thing, then there’s a good chance that you’re going to run into a fixed price for this car.

This is almost a classic negotiating case that calls for the total cost approach on the part of the buyer. Owning any car can be an expensive proposition, owning a BMW can be an especially expensive undertaking. Some things that you’ll need to take into account when thinking about the total cost of ownership will include tires, service, warrantee, financing, and perhaps purchase of your next BMW.

Once you’ve identified all of these items, you’re ready to come back to the negotiating table. How much of a price discount were you going for? Maybe $5,000? Taking the total cost approach you can negotiate some free or deeply discounted service trips for the first 25,000 miles (worth perhaps $2,000), add a year to the car’s warrantee (worth perhaps $1,500) and get a better financing deal (worth $1,000). This way you come out $5,500 ahead and made the fixed price for the car basically inconsequential.

What All Of This Means For You

Top sales negotiators realize that sometimes in life you will encounter a seller who is completely unwilling to make any concessions on the price of their product or service. You can keep beating your head against the wall or you can take a different approach to reach a deal.

The total cost method of dealing with fixed prices allows you as a negotiator to find a way around fixed prices. By realizing that any product has additional costs associated with owning and maintaining it you can keep the discussion going with the other side of the table.

The only bad deal is one in which both sides of the table can walk away feeling unsatisfied. When the other side of the table is unwilling or unable to bend on price, using the total cost technique is how you can still find a way to make a deal happen. At the end of the day, isn’t that what we are all looking for?

- Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World Negotiating Help For Technical Staff

Question For You: When do you think that the total cost method should be used – early in a negotiation or later after all other options have been exhausted?

Click here to get automatic updates when The Accidental Negotiator Blog is updated.

What We’ll Be Talking About Next Time

So there you are: the classic sales negotiator in the headlights. You’ve got a firm fixed price that you’ve been told to not budge on and yet you know that you’re getting ready to start a negotiation during which the other side is going to be hammering you to lower your price. Sure doesn’t make you want to get up early in the morning, does it?

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Get Your Armor On! 4 Ways To Defend Your Price During A Sales Negotiation

Friday, April 16th, 2010
Image Credit
Sales Negotiators Need To Be Able To Defend Their Prices

Sales Negotiators Need To Be Able To Defend Their Prices

Much has been written (some of it by me) about what a sales negotiator can do when the other side of the table has set a fixed price and just won’t budge. We’ve come up with all sorts of ways to turn a fixed price into not such a fixed price. This time out, let’s switch sides and spend some time talking about what you can do to defend your price when you are the seller – how do you counter all of those clever tactics that the other side has?

It’s Not All About The Price

When you are trying to sell something to the other side, clearly both of you have different goals. You are trying to get the highest price for your product while at the same time the other side is trying to get the lowest price. Something’s got to give.

The other side will probably be hammering you on price. A common tactic is to point out that they can go to other suppliers and get the same product for a lower price. They want you to give in and lower your price.

If you hear this often enough, you might actually start to believe it – don’t! Instead you need to realize that what you are offering is unique in some way. Maybe it’s how you deliver the product, how you stand behind it, or any one of a number of different factors. These make your offering both unique and valuable. Don’t give in!

Stop The Brainwashing Immediately!

When you are involved in a sales negotiation, you enter a strange little world. In this alternate universe how you see what you are trying to sell to the other side is shaped not by what you think about it, not by what all of your other customers have told you, but rather by what the other side is telling you about it right now.

This means that if they tell you something over and over again, there is a good chance that what they are saying will soon shape your view of your product. If they say that there is nothing special about your product and that the price that you are charging is too high, then you’ll start to believe them after awhile.

You need to make sure that this doesn’t occur. There are lots of ways to do this. One of my favorite ways is to bring a folder along with me to the sales negotiation which contains clippings and notes on why my product is so valuable. During breaks I’ll leaf through this folder quickly just to remind myself why my product is not only the best product available, but also why it is worth the price that I am charging for it.

Make The Other Side Want To Date You

There are lots of ways to treat the other side of the table during a negotiation and I’ve seen all of it done at some time or another. Over and over again what has worked the best is when you show the other side that you appreciate them and want to do business with them.

Sure there are lot of “tough guy” approaches that you can take (“I don’t need this sale”), but I’ve found that you’re going to end up making more concessions when you take this path. Play it straight, show the other side some love and you’ll make a better deal every time.

Defend Your Price By Bringing Up The Total Cost

Often when we are selling a “thing” or a service, the negotiations can come down to focusing on the price of the “thing”. As the selling side of the table, you need to steer the discussion to consider the total cost of the “thing” .

This means that you need to get the other side of the table to sit back and consider the entire ecosystem that your product will be used in. Things like installation, maintenance, replacement, reliability, and servicing need to be included in the consideration. If you are careful to include the right components, then you can easily justify your price.

What All Of This Means For You

When you are on the selling side in a sales negotiation, you need to understand that the other side will be doing everything in their power to try to get you to lower your price. Don’t do it!

There are a number of different ways that you can defend the price that you are offering your product or service at. Expanding the negotiation and making sure that it doesn’t just focus on price will allow you to justify the price that you are asking.

In the end, your ability to defend your price plays two roles. It will, of course, determine how successful you will be as a sales negotiator and it will also raise the value of the product that you are selling in the buyer’s eyes.

Question For You: What do you think is the one thing that you should NEVER do when you are defending a price?

Click here to get automatic updates when The Accidental Negotiator Blog is updated.

What We’ll Be Talking About Next Time

When a seller is standing firm and appears to have no desire to make any concessions to you on the price of the product or service that they are selling, what’s a buyer to do? I don’t care how charismatic you are, you can spend all day talking and still not make any progress on getting a better price. In this case, the best thing to do is to stop and take a different angle: try the total cost approach…

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Two Secret Ways To Break Down Firm Prices During A Negotiation

Friday, April 9th, 2010
Image Credit
No Price Is Ever Set In Stone

No Price Is Ever Set In Stone

When I was younger, I always liked to read those stories that had a knight in shining armor showing up at just the right time, dueling with the fire-breathing dragon, winning, and then riding off into the sunset with the princess. As I became older, I learned that there are no more knights, that there are far too few princesses, but that dragons still do exist. In sales negotiations we encounter them quite often – today’s dragons go by a different name: fixed prices. It turns out that with a little guidance from knights of yore, we can still find ways to defeat them…

Powerful Technique #1: Higher Authority

There is no such thing as a fixed price that can’t be moved. That’s always been my philosophy and I’m sticking with it. The next time that you bump into one of these “dragons” during a sales negotiation, do some preliminary exploring with the other side of the table.

You’re going to discover one of two things: either the price is not really a fixed price (yea!) or yes indeed it really is fixed. In the case that you discover that the other side is committed to not changing their price, you need to take a different course of action.

As scary as it might be, this is the time to push the “talk to a higher authority” button. Since the other side of the table is not budging, you really have nothing to lose by going over their head. When you do this, amazing things can happen.

Not to make any concessions on the firm fixed price may have been orders that were given to the other side of the table that you were negotiating with. There may have been very little reasoning behind this instruction – it was just seen as a set of good criteria for the other side to follow.

By moving the discussion up the chain of command, you may be able to open the door to more pricing flexibility. A more senior manager will have a different view of where the other side of the table is trying to get to and based on what you are willing to offer to them, may be more inclined to make that fixed price not so fixed.

Powerful Technique #2: Leave!

The next time that you run into a fixed price that you just can’t get to move down, stand up and leave. For Americans this is very, very difficult to do. For folks from other parts of the world it’s just a normal way of doing business.

Sales negotiating is all about sending and receiving signals. One of the strongest signals that we can send is that we are dissatisfied with the way that things are going. Standing up and leaving sends this message in no uncertain terms to the other side of the table.

Hopefully it goes without saying that leaving a sales negotiation is just the first part of a play with many parts. After you leave, you need to come back. Having sent your message to the other side the goal is now see how they have decided to react. With a little luck, what used to be a non-negotiable fixed price has become something that might have some play to it. This leave / return process can occur several times during the course of a single sales negotiation.

What All Of This Means For You

Encountering a fixed price during a sales negotiation can often make you feel like a knight who’s just entered a dragon’s lair. However, never say never – there are always many different ways to explore whether or not a price is really fixed.

One powerful technique is to bypass the other side of the table and appeal directly to their higher authority. This can often open doors that were previously closed. Another approach is to get up and leave the negotiating table. This sends a clear message to the other side and can restart discussions that have previously hit a brick wall.

Yes, sometimes a price really is fixed. However, in most cases it just takes some clever action on your part to find a way to turn a fixed price into a successful deal.

Question For You: What technique has worked the best for you to get around a fixed price during a sales negotiation?

Click here to get automatic updates when The Accidental Negotiator Blog is updated.

What We’ll Be Talking About Next Time

Much has been written (some of it by me) about what a sales negotiator can do when the other side of the table has set a fixed price and just won’t budge. This time out, let’s switch sides and spend some time talking about what you can do to defend your price when you are the seller – how do you counter all of those clever tactics that the other side has?

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