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.
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.