Negotiating in B2B: Establishing a “Sound Basis”
Consider this for a moment: You get in line at your local coffee shop. When it’s time to commit and pay, would you inform the attendant that youย have a budget constraint and need a discount to proceed?
Or, when traveling, would you ever negotiate the price of a hotel by telling the front desk that the Motel 6 down the street is 40% cheaper, asking them to match their price?
Would you ever go into a restaurant and tell them that your policy is to pay everyone NET60?
Why not? And if it worked once and word got out? Imagine what would happen…
โThe knowledge of buyers has increased, and they are no longer disposed to pay what is asked of them unless persuaded in their minds that the sellers regulate their prices on some sound basis.โ – Thomas Herbert Russell, Salesmanship, 1910
โSome sound basisโ exists in those situations. In our minds, we believe that the prices that are listed for those items exist for a reason, and we either pay them or we donโt.
Negotiating in B2B has a โsound basisโ issue.
It starts with how we position our pricing. Itโs reinforced in our proposals.
Then, the moment the client requests something during a negotiation, expectation meets reality – there is no sound basis. We “Tommy Boy” it.
David Spade and Chris Farley from the 1995 movie “Tommy Boy”
They ask. We answer with “Okey dokey!”
โWell, I canโt give you a 20% discount, but I can get you 10%. (I donโt even have to ask my boss!)โ
โYou need NET60 payment terms? Well, we can do NET45. That work?โ
Now the door has swung wide openโฆwhat else can we get?
Your price should be your price, guided by a few levers; it’s likely based on how much they buy, how fast they pay, how long they commit, and likely when they sign.
What levers? Four Levers Negotiating:
- Volume: How much product (or services, or seats, or items, or technology, or locations) the customer buys.
- Timing of Cash: How quickly the customer pays for that Volume.
- Length of Commitment: How long they commit to that Volume.
- Timing of the Deal: When they plan to purchase and need that Volume.
Confidence is contagious. Explain how it works early, often, in your proposal, and during the negotiation itself. Use the Four Levers for flexibility. Everything can hinge on them.
- Commit to more Volume? Thatโs good.
- Pay faster? Thatโs good.
- Commit longer? Thatโs good.
- Help us predict? Thatโs good.
All things you should consider paying for in the form of discounting, concessions, or whatever other flexibility is required from the customer.
โOur pricing is based on these four thingsโฆโ
Establish โsound basisโ through transparency, and youโll find your clients wonโt even think to askโฆ
My name isย Todd Caponi, CSPยฎย Iโm aย sales keynote speakerย who also teaches revenue organizations how to leverage transparency and decision science to maximize their revenue capacity. Itโs what I doโฆteach sellers, their leaders, wellโฆentire revenue organizations how we as human beings make decisions, thenย how to use that knowledge for good (not evil) in their messaging (informal and formal), negotiations, and revenue leadership. I wrote a book Book Authority had listed as the 6th best sales book of all time (๐๐ฉ๐ฆ ๐๐ณ๐ข๐ฏ๐ด๐ฑ๐ข๐ณ๐ฆ๐ฏ๐ค๐บ ๐๐ข๐ญ๐ฆ), and a second award-winning book (๐๐ฉ๐ฆ ๐๐ณ๐ข๐ฏ๐ด๐ฑ๐ข๐ณ๐ฆ๐ฏ๐ต ๐๐ข๐ญ๐ฆ๐ด ๐๐ฆ๐ข๐ฅ๐ฆ๐ณ).
Reach out if you want to discussย The Transparency Saleย sales methodology,ย or reallyโฆanything else (sales kickoffs,ย workshops,ย keynotes, the economy, history, etc.)! Emailย info@toddcaponi.comย or call 847-999-0420.
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