The negotiation stage of a sales process is one of the most stressful phases of the entire cycle, often due to misconceptions. One misconception is that the toughest person wins, so you need to learn to act tough. Another is the fallacy that the other party has more power than you, and studies show that both buyers and sellers believe they have the weaker hand.
Many think the buyer has more power because they have the cash and the final say. Disney, Apple, and Tesla, never offer discounts or price negotiations due to high demand. In these cases, negotiations are often skipped, and the sales process moves directly to closing. Myth debunked.
Price negotiations are often seen as a zero-sum game, where one party wins and the other loses, or both grudgingly split the difference. We’ve all seen movie scenes where haggling goes back and forth and ends with both feeling exhausted and convinced they left money on the table. In real life, price ping-pong is inevitable, but in order to avoid trivializing the process to end up with just a number, preparation and planning are crucial.
I offer these five key items to consider for a fruitful sales negotiation, as seen from the perspective of the sales party:
- Preparation Over Skill: A strong and skillful character might appear powerful in negotiations, but preparation is key to reaching the best agreement. Understanding the client’s problem, current situation, the best solution (which should match your proposal), and clearly defining your value proposition are essential. Preparation includes all diligently planned stages of the sales process, including the final negotiation. Even seasoned negotiators can’t “wing it”, they may be skillful on how to handle situations, but mastering the nature of the offer can’t be improvised.
- No Takebacks: Once you make an offer or concession, it’s theirs – you can’t take it back. Avoid discussing price too early in the process. If pressured, provide a reasonable range that leaves room above your target price, but stop the presentation and put equal pressure to ask if this range allows the conversation to continue. The range should allow space for any requests that might be made during the rest of the sales presentation.
- Gather All Facts: Before the final negotiation, ensure you have clarity on the four gates to reach the sale: Need, Budget, Timing, and Authority. Each must be clearly passed before moving to the negotiation phase. Continuously ask questions to uncover all requirements and objections. Only proceed to price negotiation once all requests are on the table. Questions that will help you are: “Who else in your organization needs to participate? What have I missed that is necessary to complete this offer? What other factors are needed to move forward?”
- Beyond Price: Refer to Stephen Covey’s Second Habit: Begin with the End in Mind. The client isn’t really interested in your product, what they really want is the outcome it provides, which is the solution to their need. Understand and emphasize the added value your product or service offers to the client. Uncovering the value you enable can reduce the need for price concessions because the focus is placed on the next stage after the sale.
- Plan Your “Give” and “Ask”: Determine your opening offer and walk-away floor well in advance. Plan concessions you can offer that are of low value to you but high value to the client, such as additional support services, but only offer them when asked. Pair each concession with a corresponding request, all negotiations are two-way streets. Examples of your asks could include 5-star Google reviews, testimonials on LinkedIn, or referrals to other potential clients on your radar, which are low value to your client but very high for you. Beware of clients who won’t budge or who say “our concession is to give you a purchase order.” If they push you below your walk-away, that is exactly what you should do. Bad deals push companies to extinction.
Lastly, write down your negotiation plan before attending the session (I’ll be happy to email you a form, just let me know). A written plan helps you focus, avoid surprises, gather your thoughts, talking points, and build confidence. This preparation ensures a clear strategy towards the desired outcome for your negotiation.
Happy selling!
