You need to close deals in order for your business to survive. Thank you for stating the obvious…
But invariably when closing deals you’ll have to make concessions. You’ll have to…negotiate.
Price is almost always the #1 issue with customers. Everyone wants a price break. In some industries it’s pratically guaranteed that you’ll negotiate on price. No one buys a car at sticker price. Other industries jack prices up knowing they’re going to be offering big sales or that negotiation is a fact of life.
In service businesses, many vendors will buffer their price quotes/estimates: (a) to cover their asses, and (b) to allow for some wiggle room.
So, how low will you go? How low will you go? How low will you go? Sing it with me!
Selling below cost is a bad move. (This sounds obvious, but it might not always be.) Wasn’t there a Dilbert cartoon where the guy says something like, “They cost us $5.99 to make, but we’ll sell ’em for $3.99…and just sell a ton of them to make up the difference!”
You may run into a prospect that has a ton of appeal. A big name client that would jazz up your client list. The promise of PR that’ll draw some buzz. Or (and this is a classic), the promise of deeper purchasing from that client, “if they could just get it super cheap at the outset…”
Are any of those things worth losing money?
In my experience the answer is “no”.
Lowering your price does the following:
- It devalues what you offer.
- It sets expectations with clients that you’ll lower your cost in the future.
- It ruins your profit margins.
- It makes it easier for you to lower the price the next time.
I’m not saying, “don’t negotiate.” We all have to, it’s part of being in business.
But the question still stands, “How low will you go?”
(This is the first in a multi-post series on what you’re willing to sacrifice to close a deal. Next: Sacrificing your time.)