Written by Sean McPheat |
9 July, 2018
When negotiating with a client recently, I noticed she was often coming back to the issue of pricing for our services, trying to get me to reduce the fees for some specific services we were offering.
Now, I realise that, although MTD are tried and trusted with many clients, new prospects haven’t had the opportunity to see how we can benefit their business, so I can understand that they can’t see the value in some of the specific offerings that we have.
I asked her why she felt we needed to reduce the price. (This is always a good tactic, as it helps you build up the rationale behind the request).
She told me that she needed to ‘cut costs’ and that this was one of the items that needed to be cut in price so that she could justify the investment.
Notice she didn’t say that the company didn’t need or want the service…she wanted it, but at a price that she thought right for them.
I said that the fact she was paying anything for the services proved that actually she wasn’t looking to cut costs; she would still have to pay for the services so that wouldn’t help her to cut costs.
What she actually wanted was for us to help her make a profit from the services.
Actually, no company wants to ‘cut costs’.
It’s just a simple way of saying you want to make a profit, and you think the easiest way is to cut back.
So I identified her positioning statement of ‘reduce your price’ as exactly that…a position.
I wanted to really identify her actual needs, so I could pinpoint her interests.
I asked her what benefit she would see in MTD reducing the price.
She replied that she needs to see her departmental profits increase for the next 12 months, and she sees this as one area that will help.
Having seen the real reasons, I said “So you really want to improve profits and you see one way of doing this is by us cutting our fees, is that correct? Well, if we were able to show you how we could help you maintain and increase profits using these services, enabling you to utilise these facilities in a way that would immediately have an impact on business, would you say the fees we are charging are reasonable?”
After a little contemplation, she had to say ‘yes’ to this, as it was providing the solution she was looking for.
As we offer a guarantee on our services, I was able to persuade her to accept our fees, with no discount, on the proviso that it would help her achieve her profit goals.
So, I worked with her to see how the return on investment would be greater than the initial outlay, and she was able to see the rationale and agreed to go with us.
This is the value of moving away from ‘positions’ in negotiating and moving towards ‘interests’.
People always have hidden interests that are served beneath the surface of their positions they are taking.
Uncover those needs and interests and you have a greater chance of succeeding when you are negotiating, rather than just relying on working on their positions.