Negotiating Price Without Sacrificing Margins

Jeanette Nyden — March 20, 2017 Follow @JeanetteNyden

There is an urgent problem facing many companies: Deflation, the devaluing of goods and services as demand shrivels up. For the past 5 years that I’ve been teaching and coaching negotiation skills, my clients have been faced with pressure to reduce prices. Folks, this was during one of the greatest boom decades of our life time! So you can imagine that now with the economy weak how much more pressure sales people feel to reduce prices to make the sale.

Customers may really, truly not be able to afford a price increase. That may prompt you to lower your price to sell your services or tangible goods. Or, the customer might be bluffing. What should you do? The problem is that you’ve already lowered your price or sacrificed margins to make the sale – haven’t you?! Most of the people I’ve talked to have. Or, they’ve only passed on price increases for raw materials. That means that you don’t have much, if any, sales margins left to work with. But, you say demand has dried up and you have no choice but to lower the price to make the sale.

1. Distinguish between the legitimate cries about price from the manipulative ploys. To do this, you need to listen carefully and ask a lot of clarifying questions about what the customer really wants and needs from your company. Have one policy for those customers who are temporarily hurting. Have another more firm policy for those trying to take advantage of the situation.
   
2. Be creative about meeting the customer’s interests. You can only do this by asking a lot of questions and getting to know your customer’s concerns and limitations as well as their needs and wants.
   
3. Remember that money is negotiated in a pretty predictable manner. Many of you who’ve taken my training have the negotiation diagrams. Use them to map out a negotiation strategy.
   
4. Give yourself room to bargain back and forth. This is the time to really know all the ways that you could make tradeoffs and be very clear in requesting tradeoffs from the customer. You never know, the customer might be more willing to make a tradeoff in this difficult economy in order to keep the products or services flowing.

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