How to Respond to “I Want a Lower Price!”

Posted on March 5, 2014 by Kevin McArdle in Competitive Advantage, Profitability, Value

Price is a negotiation

If I were in Procurement, and I were negotiating a deal with you, the seller, I would be a fool not to ask for a lower price. Right? Because if I ask, I might just get it.

As the seller, your best response is not always, "Let me talk to my manager." After all, the buyer may be asking just to ask or he or she may be bluffing.

Rather than feeling compelled to discount just because the buyer asked, what can you do?

The first step is to make sure the buyer really means it. Look at the context in which the question was asked. Is the question coming from Procurement, and does the buyer have a history of switching vendors for a lower price? If so, then they probably mean it.

But, if you have a long history of creating and capturing value for the customer, and you have a value-based relationship with the decision-maker, it’s probably just sniffing or, worse, posturing.

That’s when you can put a little backbone in your response. There are a couple of effective ways to respond.

One way is with what negotiation experts call "give-gets." If they want a lower price, no problem—but they also get less value. Remove something of value from the offering to keep price and value in balance. If they want you to give up something, they have to give up something too. Or maybe they give you something of value in return, like more business or higher-margin business. In other words, they don’t get access to your best features and services without paying for it in some way.

The second way to show some backbone is to take a stand. You have delivered real value with your product or service. Are they clear on that? Do they know how much? Don’t just talk about it. Prove it to them. Do the homework that shows how your solution is better or different and delivers greater impact than the alternatives, and what that’s worth to the customer in dollars and cents. If you are reducing their overall costs by 5%, then why should they get a discount? Your product at your price is a great investment for them.

These tactics can put you back in control of the game. Instead of just having to sit there and take inquiries about a lower price, use these two techniques to respond appropriately and level the playing field.

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