Are you always asked to lower your price? Does every prospect start to negotiate with you? Most salespeople would answer with a very definitive yes! The real question is how do you respond to a price negotiation request.

Are You Always Asked To Lower Your Price?

Are you always asked to lower your price? Of course you are!

The reason is that consumers and buyers are trained to ask for a lower price, no matter what. Think about it. Would you walk into a car dealership and pay the price listed on the windshield? Probably not.

Don't be surprised if you are asked to negotiate to a lower price. Expect it. What you can do, however, is change the way you respond to the price negotiation request. You do not have to lower your price if you follow some basic sales techniques.

How to Avoid Price Negotiation? State Your Price as Fact!

Did you know that how you tell your prospect the price of your product or service can invite price negotiation? The first step in learning how to respond to price negotiation requests is to learn how to state your price as fact.

I mentioned earlier we all negotiate when buying a new car. You see the 'Manufacturer's Suggested Retail Price' on the window sticker. Or the 'Some Dealers May Sell for Less' in the ad. Using that kind of language works the same way in sales.

For example, if you add adjectives or descriptive words like 'the suggested price is', 'the quoted price is' or 'the usual price is' you are doing nothing more than telling your prospect that there is more than one price for the same product. Not only will he ask for a better price, he will negotiate hard to receive it because you told him it exists!

Instead, simply state 'the price is' as fact like you would state that the sun rises in the east every morning. This informs the customer that the price will not be changed and that this is what other customers have paid.

Does Your Price Scare You More Than Your Prospect?

You must be comfortable saying your price. If you get nervous right before you tell your prospect the price, or you take a really deep breath, or if you say something like 'and now for the hard part' or 'it's a good thing you are sitting down', you are telling the prospect that you also think the price for your product is too high.

Rehearse saying the price of your product before hand so that you are completely comfortable saying it. The more you rehearse, the more your prospect will accept your price statement as fact, as opposed to something which can be negotiated.

How to Respond to Price Negotiation? Just Say No!

Having said that, many prospects will still ask for a better price, no matter what language we use. I know I often do. The key to remember though, it's okay to say no!

For example, when I am asked to discount my coaching services, I say, 'No, I am sorry I can't. Unless of course you can tell me which part of my knowledge and expertise you want me to forget or leave out when I am coaching you.

Right now you are thinking, 'But my prospects always tell me they can get the same product from my competitor at a lower price!' If this were really true, the prospect would not take the time to negotiate a better price with you. He would have already bought the product from your competitor!

Be it because of your service, delivery, or a specific product feature, the prospect sees you as different, and he wants to buy from you. He is just negotiating because he has been trained to do so.

Everyone wants the cheapest price, but the cheapest price for what they want. They key is the want. Take the time in the sales process so that you and your customer agree that you can solve the customer's problem better than the competition can, technically you are the cheapest price.

Remember, if you truly have the product the prospect wants, you don't have to lower your price. You can just say no!

How to Negotiate

Sometimes though, no matter what we do as sales professionals, we are going to have to respond to the price negotiation request. After all, your prospect can have a real concern about their budget .

Before you start to negotiate though, be sure that the customer’s budget really is the issue preventing the sale from moving forward. Here is a technique to ensure you are handling the prospect’s true objection.

Do you need some ideas on the specific language your can use with your prospect when negotiating? Here are the 4 best responses to “I want a better price” as published on Hubspot.

How to Handle The Give and Take of Price Negotiation

The whole point of the give and take of the negotiation process is to bring the sales to a successful conclusion.

One powerful sales technique to do that is to share a customer success story with a similar situation. You could also use a testimonial. This way prospects can actually picture themselves reaping the benefits of using your product. These stories can be very powerful. They really help the customer take the leaf of faith to trust you and do business with you.

Another idea is to offer something that has a high perceived value to the customer, yet has very little impact on the profitability of the sale. Maybe some extra supplies to run the product or an extra month of operator training and onboarding support. These types of add-ins just make them a happier customer in the long run anyway and that's a good thing!

For example, you could extend the warranty period. I have used this very successfully in the past because our product was incredibly reliable. Think about it. If your product is as reliable as you said it was during the sales process, an extended warranty shouldn't cost you or your company anything.

Sales Managers, Do You Know Your Minimum Selling Price?

When negotiating, you need to know that the sale is profitable for your company. You need to know how low you can go. You need to know how to calculate your minimum selling price. Otherwise, making the sale could actually cost you money.

One of the best examples of this is highlighted in an excellent article 'Making Sales and Losing Money' by the Sales Wizard, Brian Jeffrey. The article highlights a case where a sales rep, after obtaining his largest order to date, actually loses money on the sale. Not only does Brian discuss how this could easily happen, he also discusses excellent ideas on how you can prevent it from happening to you.

Sometimes you just have to walk away. Better to say something like 'I completely understand what you are saying, Mr. Prospect. Would it be alright if I give you a call in six months to see if your budget is more accommodating then?” than to close an unprofitable sale.

What is a “Profitable Sale”?

Experience has shown no matter where you set your minimum selling price, a prospect or a sales representative sooner or later will ask you to lower it. The question is not whether you will be asked permission to discount; the question is when should you say yes.

My answer is always the same: If the sales rep truly believes there is no other way to close the sale, you know, by using the negotiating techniques we have already discussed AND the sale would still be profitable, then absolutely, say yes!

It’s simple really. Remember, the bottom line is your company's fixed costs must be paid whether you make the sale or not. Therefore, any time a discounted selling price contributes at least one dollar towards paying your fixed costs, it is considered profitable. As long as all of your variable costs are covered, including the cost of the goods sold plus any variable sales commissions, the discounted price can be accepted.

How to Calculate Your Minimum Selling Price

The Minimum Selling Price Calculation Worksheet is an Automated Sales Tool that will automatically calculate a product's minimum selling price to contribute at least one dollar towards the payment of fixed costs, given the cost of goods sold and the commissions to be paid on the sale. It is one of the many automated sales tools included in my sales management training book, Action Plan For Sales Management Success.

Most managers would agree that making a sale for only a dollar is hardly worth the effort though. As such, the spreadsheet also shows how much gross profit is being made if you sell the product at a certain price. That is very handy if you or your team has a gross profit component in your compensation plans. Most importantly, you will quickly and easily have the information you need to make the right business decision on how low you can go.

Remember, the whole point in learning how to properly respond to price negotiation requests using the techniques we have discussed is so that you don't have to offer a discount in the first place.

Price Negotiation – The Bottom Line?

The price negotiation request is a given in sales. But before you automatically lower your price, ask yourself one simple question. Do your prospects want the cheapest price, or is it really the cheapest price for what they want?

Think about it. When was the last time you heard someone scream, 'Find me the cheapest brain surgeon you can find!'?

Aim Higher!

Susan A. Enns, B2B Sales Coach and Author
Schedule a free sales coaching strategy session with Susan here.

“… what I can tell anyone, is simply this – If you want to learn and understand sales, talk to Susan.”