Have you ever seen or given a sales pitch that went like this:“Take a look at the proposal. If the price is too high, just let me know what will work for you and I’ll see what I can do?”
Stop! You have just handed your prospective client a proposal and are already offering a price break. Why did you even bother to put a price on it?
Take A Step Back
Let’s talk about the perception bartering gives. Think about things you buy where you can negotiate prices: cars, pawn shops, prizes at the carnival? Industries known for “haggling” don’t tend to have the highest outside perception. Doing it with your technology projects likely will create the same assessment.
The Unforeseen Risks Of Price Haggling
Beyond the slimy feeling we often get when thinking about used car sales, have you ever stopped to consider the message you are sending when offering “flexible pricing,” especially early in the negotiation process?
What you are essentially saying, beyond that your pricing doesn’t mean anything, is that you are trying to get someone to pay more than what you really think it is worth. Moreover, that you are trying to take advantage of them!
Now whether that is true or not, that is the feeling being given because the second you say you are willing to charge less, you are implying there is no integrity to your pricing. A smart buyer may feel it is a sign of the “type” of person they are dealing with.
A Better Approach?
With customers taking multiple proposals, you may be asked to match a price or provide a different term if you are interested in the business. The decision then is up to you.
However, a better approach may be to provide what you truly believe is your best price: a price that isn’t only lowest, but meets both the customer expectation and the profit expectation of your company.
While it may be a bit gut wrenching to potentially lose business because you didn’t want to haggle, you may be surprised by the reaction you receive when you can say—and mean—you gave your best price the first time around.
Alternatively, if the price is the final indicator, perhaps suggest value engineering or scope modification as a way to meet price requirements.
A Final Thought
There will probably always be an integrator willing to drop prices to meet the customer’s needs. Usually this is a loss for the integrator, the competitor and the company because more times than not no one wins.
The company on the hook to deliver without the proper margin is often trying to “cram” the project to make udget, which ultimately makes the customer resent their choice.
By sticking to your guns and delivering a proposal and price that you can live with and deliver a high level of customer satisfaction, you will do business with a higher level of integrity and a greater likelihood of customer success.
Daniel Newman is the Co-CEO of V3B and president of Broadsuite Media Group. Prior to this, Newman spent his entire career in various integration industry roles including CEO of United Visual, a 60-plus-year-old commercial integrator. A Part-time MBA instructor, he’s also a contributing writer for Forbes, Entrepreneur, and The Huffington Post.
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