When a buyer pushes back on price, the seller hears a problem with the number, starts defending the number and more often than not ends up discounting the number.
The trouble with this is that the buyer doesn’t always literally mean the price is wrong. More likely they mean a) they have no model to justify it, b) they have a budget threshold they can’t exceed, or c) they’re worried about what it will cost next year.
Discounting is not the fix of any of these scenarios. Negotiation is and this post covers 10 best practices for doing it well.
Get the relevant info before you talk price
Get a verbal commit from your champion
Know who holds the power
Give two or three options
Anchor on list price
Diagnose before responding
Move from price to ROI
Trade, don’t concede
Extend the term
Never negotiate over email
1. Get the relevant info before you talk price
Don’t mention price until you know four things:
The pain you are solving. Must be expressed in the customer’s own words (not your own).
How often it happens. Frequency of pain tells you severity of pain.
The unit count. Number of jobs, tasks, api calls, that maps to your value metric
The critical event. A real deadline or goal they need to hit.
When you have all four of these the price you give goes from being a number that they fixate on lowering to a solution to their problem that they are excited to get.
2. Get a verbal commit from your champion
Before you negotiate with anyone, know where your champion and your exec sponsor stand on moving forward.
“Can you see yourself moving forward with us?”
“What does your boss think?”
If they aren’t ready to move forward, it’s pointless discussing price or terms. Ask the question while everyone is still friendly. It gets harder to ask later.