Sales Tips: How to Respond to "I Need a Better Price"
By John Holland, Chief Content Officer, CustomerCentric Selling®
"I need a better price." Many sellers find this request difficult to handle. It’s a great buyer question that often elicits “knee-jerk” discounting. I’d like to suggest a way to respond.
A few years ago, I coached a seller and manager through closing an order with a prospect. $960K had been quoted for their offering. A “coach” within the IT organization told the seller $850K was budgeted, the CIO would make the decision by Friday, and the seller should consider reducing the price.
In a conference call, the sales manager discussed bidding $850K or lower if necessary. My first question was whether the seller was “Column A” (the vendor of choice)? He thought he was but knew a competitor was bidding. My recommendations:
- Leave the price at $960K.
- Ask to bring his manager to a meeting with the CIO late Friday afternoon.
I explained that if the seller could get the meeting, it made me confident he was Column A. It also seemed unlikely the CIO would let the seller bring his manager if he was going with another vendor. The meeting was set. I asked them to let me know the outcome.
They were able to close the transaction Friday for $960K. Had they re-quoted $850K they would probably have gone even lower. Once sellers start discounting, smart buyers press for and often receive further concessions.
In reviewing this situation later, I realized that if the seller was “Column B” and discounted, it was unlikely he would have won. The buyer would have used his discounted price to negotiate the best deal possible with the vendor of choice.
The terms “always” and “never” seldom apply to selling, but I believe sellers should always negotiate as though they’re Column A. If asked for better pricing, sellers can respond: Am I the vendor of choice and is price the last obstacle to doing business? If the answer is anything but yes, my suggestion is to reply: You haven’t finalized your decision yet. If you decide I am the vendor of choice, I’d welcome an opportunity to finalize an agreement.
Here's a slight variation if the person requesting better pricing is not a decision maker -- after asking if you are the vendor of choice and not getting a positive response: If you decide we are the vendor of choice, I’d like to bring my manager to meet with (the decision maker) and you to see if we can reach an agreement.
This approach takes courage, but buyers will come back to Column A and the starting point for negotiations will be the original quote. If you discount, the likely outcomes are:
- The business will be awarded to another vendor and you’ve left a low price on the street.
- The buyer calls you back. Negotiations start at a lower price, and the buyer hopes for further discounts.
The suggested approach should deliver better outcomes than discounting regardless of whether you're Column A or B.