What Will You Sacrifice to Close the Deal?

A big part of doing business is negotiating. We negotiate with vendors, employees and of course, customers.

But what are you willing to sacrifice to close a deal?

It’s a tough question; one that you should be prepared to answer every step of the way. You need to know what you’re willing to give up and for what gain in return.

I’m going to try and tackle this question in a multi-part series over the next little while. I hope you’ll join the discussion and contribute your thoughts on what you’ve done in the past when it’s come to negotiation.

In the meantime, here’s a list of some topics to be covered:

  • Will You Sacrifice Your Price to Close a Deal?
  • Will You Sacrifice Your Time to Close a Deal?
  • Will You Sacrifice Your Service/Product to Close a Deal?
  • Will You Sacrifice Your Soul to Close a Deal?

The first, “Will You Sacrifice Your Price to Close a Deal?” will be tackled tomorrow.

October 11, 2006 Posted in Business by

  • http://www.yemma.com.ng Emmanuel

    Ben,
    This just reminds me of what I had to do when starting out http://www.nairahost.com. At the time we were starting out, we seemed to have many competitors. We study the market trend and discovered that the only wayy we could break into this seemly saturated market it on pricing.

    We then resulted to fight a pricing war. We offer our hosting plans at an amount that is ridiculous and is the cheapest in the country. The result? We did advertisement once and clients keep coming. So, I would say that we had to sacrifice price to win customers.

  • http://www.instigatorblog.com Ben Yoskovitz

    Emmanuel — thanks for your comments on this. I’ll be talking about pricing in my next post in this segment, but I’m glad someone stepped in and said, “I sacrificed X.”

    Not because it’s the right thing for everyone but it helps keep the discussion going, and I hope others will also say, “This is what I’ve done — and it worked, or didn’t work.”

    Let me ask you this Emmanuel — if the pricing is so low, can you still make money? What happens if you get so many clients that support becomes too difficult, but you can’t expand support services because you can’t afford to? How do you balance ridiculously low prices and maintaining / growing the business?

    Thanks for contributing!!

  • http://www.yemma.com.ng Emmanuel

    Hi Ben,
    I can still say that even with our low pricing, we are still able to make money. The only thing is that it took us some time – more than a year – to break even. The number of the clients has helped to offset the necessary bill but this was not so in the beginning.

    The first year saw us spending more on the business with little to show for it. At this point, we would have suspended the idea and possibly apologise to our existing clients then but we still went ahead.

    Something kept us going. Our desire to provide reliable hosting solution kept us going. Today, moving is gradualy coming in while we focus on launching other online solutions.

  • http://www.yemma.com.ng Emmanuel

    Ben,
    This just reminds me of what I had to do when starting out http://www.nairahost.com. At the time we were starting out, we seemed to have many competitors. We study the market trend and discovered that the only wayy we could break into this seemly saturated market it on pricing.

    We then resulted to fight a pricing war. We offer our hosting plans at an amount that is ridiculous and is the cheapest in the country. The result? We did advertisement once and clients keep coming. So, I would say that we had to sacrifice price to win customers.

  • http://www.instigatorblog.com Ben Yoskovitz

    Emmanuel — thanks for your comments on this. I'll be talking about pricing in my next post in this segment, but I'm glad someone stepped in and said, “I sacrificed X.”

    Not because it's the right thing for everyone but it helps keep the discussion going, and I hope others will also say, “This is what I've done — and it worked, or didn't work.”

    Let me ask you this Emmanuel — if the pricing is so low, can you still make money? What happens if you get so many clients that support becomes too difficult, but you can't expand support services because you can't afford to? How do you balance ridiculously low prices and maintaining / growing the business?

    Thanks for contributing!!

  • http://www.yemma.com.ng Emmanuel

    Hi Ben,
    I can still say that even with our low pricing, we are still able to make money. The only thing is that it took us some time – more than a year – to break even. The number of the clients has helped to offset the necessary bill but this was not so in the beginning.

    The first year saw us spending more on the business with little to show for it. At this point, we would have suspended the idea and possibly apologise to our existing clients then but we still went ahead.

    Something kept us going. Our desire to provide reliable hosting solution kept us going. Today, moving is gradualy coming in while we focus on launching other online solutions.

  • http://www.instigatorblog.com Ben Yoskovitz

    Emmanuel – great comment and insight. It’s interesting to see you stuck with it, and had a plan to move forward while you were losing money for a year.

    It will be interesting to see what happens with the growth — can you maintain profit margins as you expand and need to spend more money on infrastructure and employees? Will profit margins get slimmer or disappear?

    I hope you’ll keep us updated on your progress and continue to add to the discussion here!

  • http://www.instigatorblog.com Ben Yoskovitz

    Emmanuel – great comment and insight. It's interesting to see you stuck with it, and had a plan to move forward while you were losing money for a year.

    It will be interesting to see what happens with the growth — can you maintain profit margins as you expand and need to spend more money on infrastructure and employees? Will profit margins get slimmer or disappear?

    I hope you'll keep us updated on your progress and continue to add to the discussion here!

  • http://www.nomorecubes.com kimberly Kay

    Pricing does not always work. Sometimes people want premium goods at a premium price. I remember being in a pricing way while representing a high priced item that only a few of us in the marketplace had access too. We entered a price war becuase we were local and knew each other, while both are market share dropped and went to a guy who kept his price high. Go figure.

  • http://www.nomorecubes.com kimberly Kay

    Pricing does not always work. Sometimes people want premium goods at a premium price. I remember being in a pricing way while representing a high priced item that only a few of us in the marketplace had access too. We entered a price war becuase we were local and knew each other, while both are market share dropped and went to a guy who kept his price high. Go figure.

  • http://www.yemma.com.ng Emmanuel

    Ben,
    I will surely keep you posted on the growth. But let me just say that we have been able to manage the human resources we currently have at hand. So, we are not incurring any other expense in this regards.

    Kimberly, price war actually worked for us. Maybe, ‘cos our service is online-based. Meanwhile, can you share your experience of the price war with us?

  • http://www.yemma.com.ng Emmanuel

    Ben,
    I will surely keep you posted on the growth. But let me just say that we have been able to manage the human resources we currently have at hand. So, we are not incurring any other expense in this regards.

    Kimberly, price war actually worked for us. Maybe, 'cos our service is online-based. Meanwhile, can you share your experience of the price war with us?

  • http://www.instigatorblog.com Ben Yoskovitz

    Kimberly – thank you for sharing! Although the result wasn’t what you wanted, the example is a perfect one for what I’ll be talking about. Please keep the discussion alive!

    Emmanuel – I don’t think it matters if it’s an online product or not. I think the type of product can matter. Hosting is something that has a ton of competition (around the world) and is subject to lower and lower prices. Other online applications might not face the same thing. To some degree, when it comes to the online world, people do expect things cheaper and very often free…so that could definitely be part of the price war benefit you experienced – there’s an expectation of lower costs…

  • http://www.instigatorblog.com Ben Yoskovitz

    Kimberly – thank you for sharing! Although the result wasn't what you wanted, the example is a perfect one for what I'll be talking about. Please keep the discussion alive!

    Emmanuel – I don't think it matters if it's an online product or not. I think the type of product can matter. Hosting is something that has a ton of competition (around the world) and is subject to lower and lower prices. Other online applications might not face the same thing. To some degree, when it comes to the online world, people do expect things cheaper and very often free…so that could definitely be part of the price war benefit you experienced – there's an expectation of lower costs…

  • Pingback: Will You Sacrifice Your Price to Close a Deal? » Instigator Blog

  • http://www.yemma.com.ng Emmanuel

    Thanks Ben. I agree with what you said as regards the expectation of people on services rendered online. The internet has given us a lot of option and it is gradually making internet entrepreneurs to look critically at ways of cutting cost.

  • http://www.yemma.com.ng Emmanuel

    Thanks Ben. I agree with what you said as regards the expectation of people on services rendered online. The internet has given us a lot of option and it is gradually making internet entrepreneurs to look critically at ways of cutting cost.

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  • http://onlineopportunties.biz/ SadieJane

    Well, I cannot choose. Like choosing between my children. Need to think on this a little.

    But do appreciate the food for thought.
    Puts a new perspective on my focus and direction. And may lead to some changes in methods to achieve my goals.

    Anyway, thanks for sharing.

    SadieJane
    Online Business Opportunities
    Online Business Opportunities Blog
    SadiesInfo.com

  • http://onlineopportunties.biz/ SadieJane

    Well, I cannot choose. Like choosing between my children. Need to think on this a little.

    But do appreciate the food for thought.
    Puts a new perspective on my focus and direction. And may lead to some changes in methods to achieve my goals.

    Anyway, thanks for sharing.

    SadieJane
    Online Business Opportunities
    Online Business Opportunities Blog
    SadiesInfo.com

Ben Yoskovitz
I'm VP Product at GoInstant (acq. by Salesforce).

I'm also a Founding Partner at Year One Labs, an early stage accelerator in Montreal. Previously I founded Standout Jobs (and sold it).

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