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 you 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…
“The 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.” – Thomas Herbert Russell, Salesmanship, 1910
“Some sound basis” 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 don’t.
Negotiating in B2B has a “sound basis” issue.
It starts with how we position our pricing. It’s 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!”
“Well, I can’t give you a 20% discount, but I can get you 10%. (I don’t even have to ask my boss!)”
“You need NET60 payment terms? Well, we can do NET45. That work?”
Now the door has swung wide open…what 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? That’s good.
- Pay faster? That’s good.
- Commit longer? That’s good.
- Help us predict? That’s good.
All things you should consider paying for in the form of discounting, concessions, or whatever other flexibility is required from the customer.
“Our pricing is based on these four things…”
Establish “sound basis” through transparency, and you’ll find your clients won’t even think to ask…
My name is Todd Caponi, CSP® I’m a sales keynote speaker who also teaches revenue organizations how to leverage transparency and decision science to maximize their revenue capacity. It’s what I do…teach sellers, their leaders, well…entire revenue organizations how we as human beings make decisions, then 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 (𝘛𝘩𝘦 𝘛𝘳𝘢𝘯𝘴𝘱𝘢𝘳𝘦𝘯𝘤𝘺 𝘚𝘢𝘭𝘦), and a second award-winning book (𝘛𝘩𝘦 𝘛𝘳𝘢𝘯𝘴𝘱𝘢𝘳𝘦𝘯𝘵 𝘚𝘢𝘭𝘦𝘴 𝘓𝘦𝘢𝘥𝘦𝘳).
Reach out if you want to discuss The Transparency Sale sales methodology, or really…anything else (sales kickoffs, workshops, keynotes, the economy, history, etc.)! Email info@toddcaponi.com or call 847-999-0420.
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