Get the most out of your business deals, negotiate!
We’re all in business to make money, right? And we are therefore in the business of buying and selling products and services. You will probably further agree that most of us are under price pressure from our clients and we impose price pressure on our suppliers. Nothing new there, you think. Here are some of my thoughts on how to help you get more out of a deal whether you are buying or selling by actively negotiating.
When is it time to walk away
How many times have you made a sale at a ridiculous price where you lost money on it from the very start? And if you take a hard look at yourself you most likely knew before the sale was closed that this was not a good deal right from the start. In all sales negotiations you must know the point in price negotiation when it is time to walk away from the deal. This takes courage and conviction. If you prospect does not realise that there is a price where it makes no sense for you to do business then my advice is to walk away. On the other hand learn the skills to better explain your value so that your prospect really understands why you are priced where you are. If your prospect wants a “sweetener” then make a gesture by adding an extra product or service before reducing price. But do remember, there is a price below which you need to walk away.
Timing – when is the right time to close the deal
In order to get the keenest pricing or the most value out of a deal there is an ideal time by when a deal needs to close, both from your clients’ perspective and also your suppliers’ perspective. Let’s take looking at the deal from a prospects perspective. What’s the best time for them to bring in your product? If they are buying a commoditised product, time in its general sense might not be much of an issue, but maybe their existing supplier is a big thorn to them and you are solving a significant problem. In this case timing and your ability to move quickly could have a major impact and therefore your price might not be the biggest factor. If you are buying from a supplier the sales rep might need to meet a quota, they might need a sale to fill a void in their production schedule, they might be selling the end of a line product. There are lots of reasons here but find out the time constraint whether buying or selling.
Who has the power?
The power in any negotiation is of critical importance, and if a negotiation is conducted effectively the power can transfer over and back across the table. The key here is to understand that the power exists and identify early who has it. The power is easily identified as to who is controlling the negotiation, you, your prospect or your supplier. Think of it this way. If you are a retailer and the whole of your town is out of bread but you have a few suppliers who can only sell bread to you, then for your customer you can demand a premium, and your suppliers’ need to keep their price keen. The converse is also true, if you are one of many who has lots of bread to sell you must keep your price competitive and so must your suppliers. In short, understand that there is a power struggle in any negotiation. Find out who has it.
Who really makes the buying decision?
How many times have you been close to making a sale when at the last minute that “someone else” has to be consulted before the final decision is made? This might sound all too familiar if you are selling into medium-large companies. I have found that in most business deals there are four influencers: “The Money Man” – usually the accountant or person controlling the money, “The User” – who will use your product, “The Technologist” – the person in charge of implementing the use of your product and “The Decision Maker” – they make the final purchasing decision. In small deals these can be the one person. In large companies each one can be more than one person. You need to find out who these individuals are because they can kill a deal if you are unaware of their presence during a negotiation.
Summary
Deals are there to be made. Remember there must be money in it for you. Both parties need to feel there is a “win-win” when the deal is concluded. Be aware of the items mentioned above exist in all negotiation and that they can all be used to your advantage.
