In the last two posts I explained how you’re leaving money on the table by refusing to raise prices and how to use the Grandfather Discount to raise rates and keep your clients. In future posts I discuss how and when to raise prices to earn maximum profit by improving your brand while keeping your clients happy. Now I want to share how you’re killing yourself if you publish your prices and you negotiate.
In pure negotiation, neither party knows the other’s expectation. The first person to name a figure loses because the other person now knows their boundaries. The counter-party can then move their own figure closer or further away from the figure as it benefits them.
Information has value, and the one who possesses more of it is better positioned. When neither parties know the other’s limits, the seasoned negotiator strives to get the other party to name a starting price. However, a seller that publishes her price puts herself at a disadvantage if she is flexible on price. This is because her buyer starts with more information.
For more on this, look at When a seller publishes his price, he forearms his buyer with his limits but doesn’t similarly equip himself.
Why Do Customers Negotiate?
Sometimes a prospect pushes for a discount. What is their underlying motive? Do they truly demand a lower price to buy? Contrary to popular myth, a customer will almost never engage you in the buying process without being able to afford the product. Price objections from customers arise when they’re probing your confidence level. If they sense you wavering, they may interpret it as a lack of confidence in your product or service.
Believe it or not, your clients hope you’ll stand firm.
To bear this out, imagine you’re looking at a vehicle on a dealer’s lot. It sports a sticker of $14,999 but you really want it. The salesperson sidles up and you low ball him. “I like this car but I didn’t want to spend more than twelve thousand dollars.” You expect your utterance will preface a lengthy negotiation. But instead of negotiation the rep quickly answers “$12,000? Sold!”
How do you feel now? Are you pleased that you saved almost $3,000? Or are you reevaluating your decision, anxious you may have just made a huge mistake?
To contrast, imagine the same scenario but instead of giving in the rep smiles assuredly at your inquiry and begins outlining the value of the vehicle. He appears confident about his price as he shares the value of the car.
As a consumer, which experience would you rather have?
In this same way, your customers expect you to demonstrate confidence in your offering. If you exhibit conviction in the value you provide, your client will feel the validity. When a qualified client reconsiders a purchase at the last minute or brings up price, the culprit is usually uneasiness. Often this is because they sense a lack of confidence in the salesperson. Your savvier consumers (often salespeople themselves) may opt to push for a discount if they feel you’re unconfident.
Have you ever closed a customer and afterward they started haggling or questioning the value? If so, you opened the door by failing to demonstrate conviction. To recapture lost momentum, you must express confidence in the transaction. Whatever you do, don’t let their inquiry make you defensive. Build trust. Reiterate the value to assuage your client’s anxiety. Confidence is the secret to POWER negotiation!
Have you ever printed a huge run of printed material only to discover a typo after the fact? I’ll show how to end those nasty typos from expensive commercial printing jobs in the next article. Look for it in the next couple of days. And please keep your comments coming! Until then,
profitable business All!
P.S. For further reading on negotiation, I enthusiastically recommend Getting to Yes.