When it comes to dealmaking, lack of confidence will cost you
You want the deal badly. You need the business. You suspect that your price is too high to begin with.
So what do you do? You lower your price.
Most salespeople are afraid to stand by their price structure because of a single mistaken assumption: “If I refuse to negotiate my price, I’ll lose the deal.” The reality is just the opposite. If you aren’t prepared to defend your price, your customer will lose respect for you.
My good friend Ed Brodow is a negotiation expert. He wrote the book “Negotiate With Confidence.” Here are Ed’s eight concepts that will help you to negotiate the price you deserve:
You are entitled to reasonable compensation. What is reasonable? Whatever you can persuade your buyer that your product/service is worth. The operative principle here is value. No buyer will begrudge you a price that is reasonable relative to the perceived value of the product/service.
Don’t sell yourself short. It fascinates me when some salespeople are able to bring in the order at a premium price while others can’t seem to get by without discounting. What accounts for this? One salesperson gets up in the morning and says, “My product is great and my customers are happy to pay my price!” Another salesperson gets up and says, “My product is great, but the buyer will never pay me such-and-such!” Don’t sell yourself short, and your price will follow.
Don’t apologize. Once you have established the value of your product/service, present your price with confidence. My friend didn’t have the confidence to ask for his full fee, because he didn’t believe in it himself. If you believe your price is correct, just assume your customers will agree.
Always be willing to walk away. He calls this Brodow’s Law. You must be prepared to say, “Next!” or your customers will sense your uncertainty. The willingness to walk away from a sale comes from having options. It is crucial to have other potential sales. When you know that your sales career doesn’t hinge on this one deal, you can exude confidence. And buyers will bow to confidence.
Justify your price. Once you have decided on your price, it’s not good business to tell your customers to “take it or leave it.” You must provide reasonable justification so your buyer will say, “OK, that makes sense. I can accept that.” Here is your justification:
1. Give your price legitimacy: If your buyers are doing their homework, they will know you are telling the truth.
2. Focus on the value of your product/service, not on the price. Buyers will pay for value.
3. Tell them you can’t lower your price for one customer without lowering your price for everybody.
Make the buyer work for concessions. If you appear too eager to negotiate your price or terms downward, the buyer will perceive you as worth less (or worthless). If you do lower your price, be sure you make your buyer earn the concession. Ask for concessions in return, such as additional business or faster payment.
Qualify your prospective buyers. There are occasions where you may be wasting your time negotiating with a customer. If you think a buyer may be out of your price range (either below it or above it), ask: “What did you pay for this last time you bought it?” or “What were you expecting to pay?” You may want to let them know that you are not in the same range. You may want to sell them a more or less expensive item. Or you may want to fit them into an exception category — provided you can save face.
Leave the customer feeling great. Whatever you do, remember that your objective is to create a repeat customer. How to make them love you without lowering your price:
1. Be a good listener. Allow them to gripe about your price. They will thank you for being patient with them.
2. Help them to accept your price by providing reasonable justification.
3. Sell your unique strengths. Let the customer feel like he or she is getting a one-of-a-kind deal. The best!
The major obstacle that prevents you from getting the price you want is fear of rejection. One way of dealing with this fear is to lower your price. That’s the bad way — but it’s the easy way. Salespeople love the easy way.
A better way is to school yourself in assertive negotiation techniques. When you do it right, both you and your customer will feel a sense of “I win.”
Your belief in yourself and your product or service will be your best weapon. Your self-confidence will be rewarded — with a sale.
Editor’s note: Jeffery Gitomer is on sabbatical. This column originally appeared in the July 5, 2016, Business Journal.
Jeffrey Gitomer is the author of 13 books. His real-world ideas are also available as online courses at gitomerlearningacademy.com. For information about training and seminars, visit gitomer.com or email Jeffrey at firstname.lastname@example.org.