33. Should you ask for something in return for a price reduction?
Do not keep lowering your price without asking for something in return or you will make it too easy for the buyer to keep asking.
The trade off is a very basic yet important strategy when dealing with buyers. Every time you give in to one of the requests such as price reduction, marketing money, extra services, etc., the trade off strategy should go through your mind: "If I do that for the customer, what can I ask the customer to do for me?”
This is our attitude, not our actual statement. Negotiating as a seller is not the same as negotiating as a buyer. If you are selling and you get tough and walk away, at the end of the day you have not sold anything. Most of the negotiating strategies are designed for buyers and must be adjusted if used by a person trying to make a sale.
Many people complain that customers or buyers today have no loyalty. "Show a customer how to save money on a certain item and they will shop around to see if it can be purchased for a few cents cheaper from a competitor."
If customers are not loyal, perhaps it is because when you give everything you have, you do not ask for anything in return. Trading builds a relationship.
Giving and taking are part of selling; they are part of the process and not a sign of weakness! Here are a few points to keep in mind:
1. Do not assume the customer knows what you want. Make your request loud and clear! Do not be shy about asking for something in return when a customer asks you for a price discount. If it is done in a spirit of cooperation they will not take offence.
2. Whenever you give a price reduction, be sure to ask for something in return. You are not doing anybody favors by giving away something for nothing - the customer will not respect you and you hurt your self respect.
3. Make this an important principle in your selling. Never give up anything without getting something in return (even if what you get seems trivial). The customer offers to buy the floor model of the coffee machine at a reduced price. You, instead of lowering the price, offer a 90-day free service guarantee.
4. The customer requests a lower price on a larger than normal order. You offer some additional marketing support instead.
5. The customer complains that the price is too high. You offer to sell your higher quality product line at a slightly lower price. Explain to the customer that the higher quality is an investment in their customer satisfaction.
6. Whenever lowering the price, never go down in equal increments. If you have an extra five dollars built in, go down two dollars, and if you must go down a second time, reluctantly go down another dollar and twenty five cents, a third time go down a dollar and ten cents. Each time you go down on your price ask for an additional item or something else in return.
Comments:
Rather than lowering my price I have often said two things to a customer or a prospect. Well Mr. Prospect I know that this price is slightly higher than you are used to paying, but give me a moment to explain my Insurance policy to you ( I sell food so this often takes them back for a moment). Anyone can come in with a low price but the real question is what are they offering. If the price is low and they can't provide quality for your customer or actually deliver the product because they don't use a consistent manufacturer, what in then end is a low price? It's you scrambling at the last minute. My fill rate and consistency of quality offer you an insurance policy you'll be happy to spend a few extra pennies on week after week. It's like walking in to your kitchen and knowing when you flip on the light switch your going to be able to start your day. If you simply want low price and no guarantees I can go back and discuss it with procurement. I rarely ever lower my price.
Michael S. Hutchison
"It’s always a great idea to ask for something in return. My prospect, “if you give me the next shot at your business, I will reduce my price, but once you have benchmarked my service against your current service, we will then renegotiate my rates, does that sound fair?” Or you can use the scenario of a shortened liquidation period on the first order and then renegotiating those terms once you have your foot in the door. I once used this tactic to get business with UPS. We had 400 offices nation wide receiving our payroll checks and sending out payroll 2 times a week. I said, “if you give us the customer service business, we will switch our service from Fedex to UPS nationwide”. It worked and my former company still uses UPS and they still staff UPSs Customer Service Departments."
Kristan Wilson
"In selling, the seller really does have the upper hand when it comes to negotiating the deal. The buyer will always try to low ball to see how much savings that they can get out of the deal. My sister currently has her house up for sale, and was offered a price that was $15,000 below the listed price. I advised her to go back with the original price of the house ... but should the buyer want the house at the price that they had stated, it's going to come without the fridge, stove, washer, dryer ... etc. even down to the furnace!. All I can say is her real estate agent was shocked at her reply."
JoAnne Welch
"What do you suggest that we offer that is not already included in our sales pitch? We offer to handle payroll, worker’s comp, counseling, customer service, drug screens, and criminal backgrounds – which is what every agency in this area also handles. What I am looking for is something that makes Ambassador stand up and above the rest – why should they choose my services over another company?"
Angela Brewer, Ambassador Personnel
"I agree, we come with the package. Not only are our clients buying our service but they get us. I tell them call me anytime if you have questions, problems, etc. I think them knowing we are available more than just regular 8-5 and are willing to go the extra mile, makes our office better than other temp services."
Sherry Tyner
"The first thing I think of in terms of trade-offs (with Ambassador) is our rate. If we lower our rate, we want to able to have more employees at that work site. If they only want one employee, we aren’t going to be as willing to lower the rate. However, if they want 25 people, we can lower it substantially. Good advice, Bob."
Suzanne Davis
"You are right, often we forget and don't realize that we also have the power to negotiate. We get so locked into selling that we forget that we to can ask for something in return. Thanks for the reminder and it is my goal to try this with my next order."
Kathy Hart
"This is a great lesson I have seen this work. We have often gone down on price for larger quantities of orders. Such as 30 temps at a specified rate but should the number of employees decrease the rate will increase soon."
Crystal Brown
"This article reminds me of what the true art of selling is. Years ago people referred to buying a product from a company as “trading” with that company. Trading used to be the staple that built the relationship between the buyer and the seller. Today we are to eager to just buy or sell, and move on. There is very little trading that happens. If we begin to “trade” with our customers again, then we will build stronger, more loyal, clients."
Scott Green
"We had a customer that we got the contract even though our price was higher than the competitors. We provide employee staffing. We won the customers loyalty because we offered them more. We had a rate for the regular employees that we found for them, but if they had a person that they new and wanted to hire then we had a lower rate for them. Any time they needed more employees they new they could count on use to provide them with what they needed. We asked for them to call use for what ever their needs were and in return we gave them price adjustments."
Laura Rice
"I have used this recently in a sales call. She asked us for help in finding a particular type of person and asked if we were going to give her them. I said that it depended on what was in it for our company. Could we expect some orders from them? Also done this as a buyer in my husband’s favorite store…Best Buy and it worked."
Linda Cassell
"For the most part, we do explain how we do not send just anyone for their positions. WE take the time to look for the correct person with the correct qualifications. I have done some trading when it came to direct hires, and it was in our benefit."
Pam High
"A lot of times agreeing to lower a bill rate will be agreed on if it means that we can get more temps out to this client which helps to balance out the agreement."
Marie Royal
"I believe I understand this concept well. The things I offer back or “trade off” with the customer are actually selling points to my service. For example, I offer ME, I offer insurance benefits when discussing payroll services, I offer delivery services when discussing temps, I offer personalized service and pick up and delivery of timesheets and checks all the time. There are many more options and trade off’s we can offer. I learn a new one at least weekly. I also pay very close attention to my “higher authority” when she is with me and wheeling and dealing with the customer to learn what she offers."
Patsy "CiCi" Clements
"Should you ask for something in return for a price reduction? YES- Never give something for nothing. When a customer ask for a lower price ask for something in return no matter how small it might be. Or using product as a example give them a higher quality product at a reduced price and sale it as a quality to there customers."
Christal Cornacchia
"You should always ask for something in return if you are reducing your price. You are not doing anybody favors by giving away something for nothing – the customer will not respect you and you hurt your self respect. Giving and taking are part of the process and not a sign of weakness."
Stacy McDaris
"If customers are not loyal, perhaps it is because when you give everything you have, you do not ask for anything in return. Trading builds a relationship."