“Price negotiable” is a term which frequently appears in the sales landscape. In various industries, the price of a product or service can vary depending on a range of factors, from which discounts and promotions are available at any given time, to the current economic climate.
Entering into a price negotiation with a client can be an excellent way to increase your chances of sales, and improve your relationship with prospects. However, it’s important to ensure you’re approaching the process correctly. In some cases, letting a customer know a price is negotiable can lead to some difficult conversations, wherein consumers are constantly asking you to “do it cheaper”.
Price negotiable is a sales term used to refer to a product or service without a specific price set in stone. In most cases, a company willing to engage in a price negotiation will have a “price range” in mind, which starts with the lowest price they’re willing to accept.
During sales conversations, many customers will ask whether a price is negotiable, if they believe the cost of your product or service is too high for their budget. This can actually be a positive sign for a sales team as it indicates that the customer is interested in the solution, but requires some compromise from you. While not all sales teams offer negotiable prices, some find that doing so can help them to form longer lasting relationships with their customers.
Dealing with a request for price negotiation can be a complex process. Some consumers assume that if a price is negotiable this means they can essentially pick their own price for the service or product. Of course, this is rarely the case. Fail to approach a negotiation correctly, and you could end up not only losing a customer, but damaging your brand’s reputation.
Here are some tips for responding to price negotiation requests.
First and foremost, before starting any discussion with a client, sales professionals will need to determine whether their solution can be defined as “price negotiable” or not. If a salesperson has no room to negotiate on cost, then they should make this clear to customers immediately.
If a negotiation is possible, the seller will need a clear insight into how far they can go to discount the price and reduce the cost for the buyer, while still ensuring the business is profitable. Know exactly what the lowest price you can offer is, and make sure you don’t go any lower.
Understanding the buyer is an important step in building lucrative sales relationships. It can also be a good way to keep negotiations on the right track.
For instance, if you know your customer is concerned about paying full price for your service because they don’t know whether it will pay off in the long-term, you could offer them a discount trial they can use to test the service before signing up fully.
If your customer is concerned about paying full price for a solution because of short-term budget issues, offer them a lower cost option, with the ability to upgrade to a more fully-featured product or service in the future. Build your price negotiation around the goals and challenges of each customer.
If you advertise your product or service as “price negotiable”, and a customer approaches you asking for a lower fee, you might be tempted to offer a big discount straight away, to improve your chances of securing a sale. However, this could also damage the perception the customer has of your company.
If you offer a big discount immediately, without much negotiation, they might question whether your solution was ever really worth the full price. Instead of immediately diving in with huge discounts, start small. Ask them about their reasons for asking for a discount, and get to know their issues. This will help you to tailor a response that’s more personal to each client.
In some cases, the main reason a customer will request a price negotiation is because they’re not fully ready to make a purchase. They may need to get approval from a higher-up member of their team, or wait for a budget to be established by the financial professionals in their business in the B2B landscape. If this is the case, it’s worth giving your customer some extra time.
Ask them to talk to the people they need to gain approval from, and get their feedback on any concerns they might have with the price. You could also suggest arranging a meeting with the leaders in the business, so everyone can get involved in the price negotiation together.
Finally, many sellers are anxious about reducing the price of a product or service even temporarily, because they’re concerned about the impact it will have on their bottom line. However, it’s worth looking more holistically at the situation. For instance, offering a customer a discount if they sign up for your annual service instead of your monthly solution will deliver more revenue for you in the long-term, and improve your chances of creating a loyal brand advocate.
It’s also worth remembering that offering extra discounts and support during difficult periods can improve your brand’s reputation, and open the door to new opportunities in the future. Buyers from both the consumer and business world will remember the sellers who show them empathy in times of need. If you can be accommodating now, they may reward you later.
What are the five rules of price negotiation?
There’s no one-size-fits-all way to master price negotiation, but there are certain rules you should follow. These include:
Should you negotiate on price?
Some companies simply can’t afford to negotiate on price. The price they offer is the fairest option they can provide, based on their expenses and profit margins. Others find offering price negotiation is a great way to strengthen relationships with customers and increase sales.
How do you let buyers know the price is negotiable?
Some companies place “price negotiable” or “contact sales” on their product and service pages to let customers know there’s no set price for their solution. Others simply broach the topic of negotiation during a sales conversation, letting customers know there’s some wiggle room available.