Written by Sean McPheat |
17 August, 2017
Your ability to make a profitable sale often hinges on your skills when discussing what price you are willing to settle on for your product.
If you are worried about whether you will make the sale or not, you may well offer a lower price to get the buyer to agree to the sale.
However, buyers are cute (!) and have often been on courses themselves to train on how to negotiate a lower price.
So what can you say that will give you a firm foundation to build on when negotiating a price?
Firstly, you need to find out the reason for a buyer asking you to lower your price.
The discussion may go something like:
Buyer: You’ll have to do better than that on your price
You: Do you mind me asking why?
Buyer: I’ve got quotes from two other companies and they’re coming out cheaper than you
So, you know that they have been shopping around and are comparing simply on price.
If the buyer was to say ‘Because our budgets have been lowered and I have to keep within certain figures’ then the rationale is different and your approach would change.
So, firstly find out what why they are asking for discount.
Then, discover whether it’s price or cost that is concerning them.
What? Aren’t they the same?
The price would be the ‘ticket price’ or the up-front price they are paying for the product.
The cost would involve the long-term issues they may be facing and it could be a lot different to price.
Suppose your product is more expensive than the competition but yours has a five-year warranty whereas the competition has three.
The extra piece of mind that the longer warranty gives the customer may be the reason for the higher price.
You can then justify the extra they are paying on price by the cost-savings they may get for the longer warranty.
It sounds something like this:
“When you say we’re expensive, are you referring to the price or the cost? If it’s the price, yes we are more expensive, but that’s so we can reduce the costs to you over the long-term. Let me explain….”
Another phrase you could use if you simply can’t match the price the buyer is requesting is to question how a competitor could possibly be that cheap.
You could say something like:
“I am afraid that we can’t match that price. But If I were you, I would be asking myself how can they sell the components at such a low price? I would say that they are sacrificing the quality of the component for price.
But we may have some movement opportunity. If you were to increase your order to 100 per week, then we could lower the unit cost to £25.”
Do you see what you’re doing here?
You’re questioning the validity of the competitor’s offer, while at the same time trading a lower price for a higher order rate.
As long as the buyer realises that you’re not a soft touch, they will see that the benefits of your product would outweigh the lower price.
A good phrase to use when you are checking the validity of the position your buyer is taking is something like:
“What I may be able to consider is…”
This shows that you are willing to work effectively with the buyer, while checking out what they may be willing to move on.
It helps you both set a position from which to negotiate from.
So, if possible, think of how you can use these phrases (personalised for the specific situation you are in) and work with the buyer to see whether you can both get to an agreeable price you are both happy with.