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How to turn a sales negotiation from cost to value?

09

Nov

2009

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Clients tend to dwell on cost because that is what they know to nego­ti­ate… any tips on how to swing the nego­ti­a­tion away from cost and over to value?

This is one in Minutecoach’s LinkedIn Q&A Best Answers series, widened out and rewrit­ten for those not on LinkedIn. If you’d like to read the orig­i­nal, you can use the link at the end of the article.

Why cus­tomers nego­ti­ate on cost
In ser­vices sales clients dwell on cost because they know how to nego­ti­ate on cost; they’re com­fort­able. Attempt­ing to move from cost to value can remove that com­fort and even raise ques­tions as to motive, because it ‘feels’ to a cus­tomer as though you can’t, or won’t, nego­ti­ate on a level play­ing field. You’re intro­duc­ing con­cepts that are dif­fi­cult to quan­tify, that rely on par­tic­u­lar con­texts or cir­cum­stances to be realised. If you’ve started on cost, you’ll prob­a­bly need to fin­ish on cost. But that doesn’t mean you can’t get a big­ger sale…

Instead of ‘push­ing’ value, alter your price and value propo­si­tion, change your offer. You should not need to move from nego­ti­a­tion on cost, but win busi­ness as the imme­di­ate per­ceived value of your offer is more com­pelling than another’s.

Value propo­si­tions for ser­vice businesses

In ser­vice indus­tries and many other relationship-based account busi­nesses, unlike a wid­get which cost ‘x’ and needs to sell for ‘y’ you can slice and con­fig­ure your ser­vices to suit a mar­ket seg­ment. Design ser­vices to upsell other ser­vices, develop incre­men­tal repeat­ing add-ons that take no time and lit­tle effort to sell, but add greatly to cus­tomer ben­e­fit. Bought once, they are a sim­ple tick­box, not ques­tioned on the next sale or contract.

Don’t look for mar­gin on a sin­gle com­pet­i­tive sale but accrue value for the client in bite-size pieces they under­stand. Engi­neer it so your final fig­ures build over the rela­tion­ship, pro­vid­ing the prof­itabil­ity from that sec­tor that you can rea­son­ably expect.

No trick­ery, a lit­tle tech­nique. More trust.

Orig­i­nal LinkedIn Question

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One comment on “How to turn a sales negotiation from cost to value?

  1. Laura Sherman on said:

    Very inter­est­ing arti­cle. Good points! This would def­i­nitely work if you plan to develop a rela­tion­ship, sell­ing your ser­vice over the long term.

    When some­one is very inter­ested in hag­gling, I will some­times ask, \“What do you think my ser­vice is worth?\” I will get very dif­fer­ent answers, but it usu­ally gives me an insight into how they are thinking.

    I will some­times lower my price if their con­cept is close to mine. Some­times their answer shows that they do value my ser­vice at my price point, but that they have another con­cern. With the above ques­tion, they will tell me and we can move forward.

    I do find that it can be hard to raise my price once the client is used to a cer­tain price, though. Using your strat­egy, how do you over­come that hurdle?

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