“Will you give us a discount on that figure?”
“Can you match the lower price I can get down the street?”
“Can’t you do it cheaper?”
These are the kind of questions people running start-ups and small businesses get asked an awful lot.
But what are the best answers to give? Here, we look at how small business owners can respond to these kind of questions, without losing business and without cutting prices and profit margins.
One of the reasons they’re asking you these questions is because they know you are relatively small.
Questions about your price are a good sign
They wouldn’t normally throw the same questions at the checkout of a major supermarket. And they’d be less likely to pose these questions if you were a huge multinational corporation.
But let’s focus on the good news.
Questions about your prices can be a big flashing sign that a win-win agreement between your business and your questioner is possible.
If the potential buyer is focusing on your price, then you are almost certainly offering something that they want. How you handle the conversation determines whether they get what they want at a price that works for both of you.
There’s a range of things to do to prepare great answers for these common situations – and prepare you should!
Treat every question as an opportunity
The first thing is to treat every question involving downward pressure on price as an opportunity to underline the value of what you can do for the questioner.
Each question is an opportunity to take you closer to an agreement that will work for both of you.
There is a stereotyped view of price negotiation that it must involve a ruthless, cold-blooded, aggressive approach. This view is misguided.
The approach I recommend is much more positive and more pleasant, with the aim being a win-win outcome satisfying both parties.
Negotiations over price are far more likely to get the right outcome if conducted like a gentle, sensitive ballroom dance with two partners seeking to find an effective way to become entwined for mutual benefit.
Take a positive approach to price negotiations
This needs a positive approach on behalf of the seller – aimed at solving any joint problems you have to overcome to get an agreement that works for both of you.
This positive approach needs to be reflected in great answers for your prospects, however negative their questions may be.
In the conversations along the way, you can judge if the approach of your negotiation partners is so negative that you wouldn’t want to do business with them under any circumstances.
But if you give a positive lead it can set the right constructive tone and make success of the initial agreement and excellent future business beyond that a more likely outcome.
It’s much easier to take a positive approach as the seller if you plan your initial proposal, your negotiation position and your potential great answers to their likely questions in advance.
The great answers you need to be giving during price discussions are of course intertwined with your negotiation strategy and tactics themselves.
Understand the buyers needs and wants
A key part of getting the price discussions heading in the right direction is to understand what your potential buyer needs and wants.
You can establish that by asking the right questions and listening ever-so-carefully to the replies.
There’s a danger of giving a price too soon, before you’ve established every requirement. The more you know before you come out with your initial offer, the better you can craft it, position it and effectively highlight its merits with your answers to their challenging questions.
You may have a set list of well-worked-out standard prices, but often the prospect in a negotiation wants something different from the standard or something that involves a combination of the things that you can provide. In these cases it’s often a matter of coming up with a package of elements.
However just giving just a single straight take-it-or-leave-it price package can be all too easy for the prospect to leave. What’s generally better is to offer a range of options with different prices. This aids the process of negotiation and more easily heads you both towards a win-win outcome.
Develop different packages with banded prices
One enlightened approach is to prepare a “gold, silver and bronze” set of options with different prices. This gives you flexibility during your negotiation and allows you to consider a lower price without actually backing down.
Having a graded set of options means that you have a pre-set structure. So if the price has to be lower, then you can instantly make it clear in your answer what will be taken out of the package as a result.
An essential element of effective negotiation is to make sure that when you’re asked for a concession, you only agree in a way that ties it to an appropriate concession in return. It’s a “something for something” approach. Presenting a series of differently priced options enables you, in the face of downward pressure on price, to gracefully move position easily without surrender.
Surrender constitutes agreeing to a price reduction without any balancing concession. This is dangerous. It can be perceived as indicating that the original price you quoted was unrealistically high and that you were merely seeking to “see what you could get away with”.
Shifting price with a corresponding concession underlines the impression that the original prices were properly thought out and that your initial costings deserve respect.
The other reason to avoid a concession with nothing in return is that it invites another request for another price drop. If you’re asked for a 10% discount and you give it with no corresponding concession in return, there is nothing to stop your negotiation partner from then seeking a further 10% discount – and then another!
Underline the value you offer
Having a well-worked-out set of graded starting options makes it a lot easier to give great positive answers, because the substance of what you can put forward has already been established. It helps prevent you from giving badly-thought-out answers on the run, which you may live to regret.
So the key to your answers is to directly respond to the question, underline the value of your offering and convey a positive proposal to take things forward.
So if you are discussing your gold offer and they ask you if you can do it more cheaply, the answer is a qualified “yes”.
It’s “yes but” and after the “but” you show what value you can give for your silver offer. The price is indeed lower and you make it clear to the asker what benefits they don’t get and do get as a result. However you can still make it positive.
For example, when I’m discussing sessions I run to help clients become better and more confident at being interviewed by journalists, my gold offer would typically involve having a camera operator to record their answers and play them back so they can more easily see what needs to be done to improve the content, structure and delivery style of their replies.
In answer to the “cheaper” question on the gold option, I can do it for less. This involves not having the camera operation. I make the point that while it is great to have the opportunity for the would-be interviewees to see themselves back as others see them and also to look back over interviews later, we can still have a highly beneficial session at a lower price without the playbacks.
Being positive and prepared will help you to a ‘win-win’ result
Having prepared gold, silver and bronze tiers helps you to construct great pre-thought-out answers to predictable pricing questions.
Conversations about price can become heated, tense and nasty. But when you have positive answers worked out in advance – based on a well-crafted foundation – it makes it so much easier to counter the negative questions aimed at pushing down your prices.
Planned positive answers can help move all negotiating partners towards a win-win outcome. They also keep things more civilised than they might otherwise be.
When you can give positive, useful and friendly answers to pricing questions it helps pave the way for renewing contracts, expanding future arrangements and taking your business relationships to a new high.
About the author
This guide has been written for ByteStart by Michael Dodd who helps business people communicate in more inspiring, positive and confident ways – in one-to-one conversations, in media interviews and in conference and sales presentations. He is the author of Great Answers to Tough Questions at Work (published by Capstone).
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