Today, we’ll conclude our discussion on handling price in selling.
Well, in my last missive, we discussed why negotiation doesn’t help you as much as you think when you’re trying to maximize profit. In fact, many times, price negotiation can actually work AGAINST you when you’re trying to maximize profit. If you missed that article, go read it now. It’s okay. I’ll wait.
Now that you’re up to speed, I ended that article by saying, “One of the most pathetic strategies I see salespeople using is begging for the ‘last shot’ at the price, which tells the customer that the proposal they have means nothing, and that the salesperson is willing to beg for the business. There are ways to prevent that….but this article is running a little long.” Now it’s time to talk about that, and to discuss ways salespeople should handle price pressure in the call.
I’ve said that negotiation is bad. “But Troy,” I hear you saying. “Customers are always starting price negotiation with me. Then I have to do it! What then?”
The fallacy in that statement is simple. Yes, sometimes customers do start negotiation. But most of the time, price negotiation is started not by the customer, but by the salesperson. Salespeople initiate negotiation – and not coincidentally, give away price – in a variety of ways, usually without even knowing it or recognizing it. I had a perfect instance happen two days ago, in fact.
I was role-playing with a salesperson who works for one of my clients. The situation was a take-away sale from a competitor. The salesperson is a darned good one, and one that I respect, so this is something that can happen to anyone. I asked the price (as the customer), and he quoted a price. And without thinking, he said, “How does that compare?”
The funny part was that saying, “How does that compare?” was completely a reflex action on his part. He knew it was wrong, and even as the words were coming out of his mouth, the expression on his face said, “I shouldn’t be saying this.” Yet he did – because for years, that’s what salespeople have done. The problem is that, when you ask the customer for feedback on your pricing, you invite negotiation and communicate that the price you have quoted isn’t the ‘real’ price. Whenever you imply flexibility, you have not communicated a specific price for a specific product or service. Yet, that’s a fear-based reaction that comes from the fear of losing the sale.
Other great ways to invite negotiation are:
“This is the best deal I can get you.” Nonsense. That implies that there are multiple “deals,” which means that a better one is right around the corner.
“I want the last shot at the price.” That means that whatever you have just quoted, it doesn’t matter – shop me elsewhere and I’ll come down. That also precludes your ability to close the deal right then, so it’s a double-whammy.
“I want to earn your business.” Classic “sales words.” “Earn your business” is one of those phrases that’s only used by salespeople, and usually car salespeople at that. Sell like a car salesperson, end up negotiating like a car salesperson.
“How’s that price work for you?” Any invitation to the customer to give feedback on the price also invites the customer to cut price. Don’t do it. Want feedback on your price? Ask for the business.
Ultimately, when you give up price, you give up profit. Profit is good. That’s what keeps us going. The all-time best way to handle price is also the simplest. “Here’s my price.” Period.
Of course, there’s one other key facet here. In order to succeed in getting a high price, you must be an active prospector. That’s because strength in pricing comes from the ability to walk away from bad or unprofitable business – and you can’t do that if you have to have the next deal.
