Posts Tagged ‘fixed price’

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?

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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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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?

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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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The Story Of A Firm, Fixed Price (A Fairy Tale)

Friday, April 2nd, 2010
Image Credit Fixed Prices, As With Other Things, Are Not Always What They Appear To Be

Fixed Prices, As With Other Things, Are Not Always What They Appear To Be

How many times have you really wanted something only to discover that its price was too high? What did you do then – give up and go away? As sales negotiators we are taught that everything can be negotiated; however, in our personal lives (as well as our professional lives), if we see a price written down, we shrug our shoulders and say “well, that’s that” . Turns out that we’ve been getting it wrong all this time…

Americans And The Myth Of A Fixed Price

What makes the issue of how best to deal with fixed prices all the more interesting is that there is clearly a cultural issue here. Americans (that’s me!) truly view fixed prices as being “set in stone”.

This differs from many other parts of the world where a fixed price is simply seen as a starting point for further discussions. All of us need to adopt this mindset if we want to be able to overcome the power of a fixed price.

The negotiating legend Chester Karrass probably said it best when he said that the best way to look at a fixed price is to think to yourself “That’s the most that the seller or merchant wants. I wonder what the least they will take is?”

I’m not sure what makes so many of us assume that just because we see a price written down or printed in a catalog that there is no way that it can be changed. What we need to do is to take a step back and realize two important things. First, we won’t be the first person who ever asked the seller for a better price. Secondly, we need to realize that somebody at some point in time has gotten the seller to give them a better price – once again, we won’t be the first.

With this kind of thinking, you can shift from wondering if it’s possible to negotiate a better price to wondering how much of a better price you can negotiate. How’s that for progress?

Ways To Test A Fixed Price

Although a fixed price might initially appear to you like a brick wall that there is no way to get around, I’ve got some good news for you. You have a lot of ladders and shovels available to you and so there’s always a way to explore how you might get a fixed price to not be so fixed after all. Here are some suggestions:

  • Change the quantity: what would happen to the price if you bought more? When the seller sees an opportunity to make more money overall, he’ll get more flexible on the price of just one item.
  • Change the payment: the seller wants to get their hands on your money as quickly as possible. If you pay with a credit card, they’ll be out 1-2% in credit card fees and they’ll have to wait for their money. Sometimes paying cash can get you a better price. Alternatively, lots of sellers want you to open an account with them and they’ll give you a discount if you do. This is the same as getting a discount on the deal that you are working out with them.
  • Change time: just about all items go on sale at some point in time. Maybe it was on sale last week, or perhaps it will be on sale next week. No matter, you are standing there right now and you are willing to buy. Talk about sale prices and see if you can get them to put it on sale for you right now.

What All Of This Means For You

Repeat after me: there is no such thing as a firm fixed price. Every price is negotiable and just because you see something written down or see a price in a printed catalog, don’t get fooled into thinking that it can’t be changed.

You may have to get creative in order to negotiate a new price – the burden of coming up with ways to make a deal happen lies on your shoulders. Changing quantity, payment, or time can turn no deal into a real deal.

Once you have trained yourself to view a fixed price as simply being a starting point for future negotiations, you will have positioned yourself to get a better deal. Now you just have to take the time to find out how best to test the fixed price and you’ll be on your way to negotiating success.

Question For You: do you think that there is ever a situation where a fixed price can’t be re-negotiated?

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

What We’ll Be Talking About Next Time

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. 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…

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Posted in price | 2 Comments »

Negotiation Firestarter: The Take It Or Leave It Tactic

Thursday, January 8th, 2009
Take It Or Leave It Is A Negotiating Tactic That Can Cause Hostility

Take It Or Leave It Is A Negotiating Tactic That Can Cause Hostility

If you really want to set off the other side of the table during a negotiation, one great way to do this is to tell them that they can “take it or leave it.” This is pretty much the verbal equivalent of throwing gas on a fire – you are guaranteed to generate hostility on the other side of the table when you use this phrase.

We react in exactly the same way if the other side tries this tactic on us during a negotiation. This is understandable; however, if we take just a moment to think about it, we should probably be used to dealing with this negotiating tactic.

The deals that are presented to you in the course of an average day are almost all of the “take it or leave” it nature. You see these types of deals in the insurance bills that you get, the groceries that you buy, and the parking ticket that you pay. Although they might not say it explicitly, these are all subtle forms of the “take it or leave it” tactic.

Before you decide to burst into flames the next time that someone uses this tactic on you, take a moment and give some thought to why the other side might be using this tactic. They have decided to only offer a fixed price and here are some of the reasons that they might be doing this:

  • They don’t want every one of their employees to have to have good negotiating skills or to take the time that a negotiation requires in order to successfully complete a deal.
  • They might be willing to negotiate with you on this deal; however, they don’t want to have to negotiate with you in the future.
  • If they negotiated with you and ended up lowering their price, then they would have to lower their price for all of their customers.
  • They know that you cannot afford to “leave it”.
  • They have already dealt with many other customers who had no problem paying their fixed price.
  • They can’t afford to lower their price any more because they are already selling at their rock bottom price.

When you look at it this way, you’ll realize that most business is normally done using the “take it or leave it” tactic no matter what we choose to call it. We need to realize that many prices are set because of existing laws or regulations.

If you find yourself in the position of having to use the “take it or leave it” tactic during a negotiation, then you need to search for ways to reduce the natural hostility that this is going to cause in the other side.

Here are the best methods for reducing hostility when you decide to offer only a “fixed price” to the other side:

  1. Show the laws / regulations that are causing you to have to offer the product at the stated price.
  2. Show the company policy that requires the product to be offered at the given price.
  3. Publish a price list.
  4. Publish a standard list of discounts.
  5. Display the price of your product / service where everyone can see it.
  6. Provide proof that shows all potential customers that the price that you are using is the same price that is being offered to everyone.
  7. Simply make sure that you provide a good justification for the price that you are using.

As always in any negotiation situation, the more discussions that can be held face-to-face the better the negotiations will go. Listen to what the other side has to say and make sure that everyone has a chance to save face and come out ahead.

Have you ever been confronted with a “take it or leave it” deal during a negotiation? How did you react to this? Have you ever had to present a “take it or leave it” proposal to the other side? How did they handle it? Leave me a comment and let me know what you are thinking.

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